Servicing Guide

Published September 9, 2020

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What are the requirements for obtaining a property valuation and evaluating the conditions of the property for a Mortgage Release?

If the servicer determines that the borrower meets the eligibility criteria stated above for a Fannie Mae Mortgage Release, it must obtain a property valuation to determine the market value of the property securing the mortgage loan. The servicer must follow the procedures in Obtaining a Property Valuation in F-1-14, Processing a Fannie Mae Mortgage Release (Deed-In-Lieu of Foreclosure) for obtaining a property valuation.

Prior to the borrower executing a Fannie Mae Mortgage Release, the servicer must schedule property inspections to ensure that the property is free of environmental contamination and does not pose potential legal risks. See the Property Preservation Matrix and Reference Guide for additional information. The servicer’s action will depend on whether the servicer previously ordered an interior BPO, as described in the following table.

If the servicer has… Then the servicer…

previously ordered an interior BPO

is authorized to use the interior BPO to determine whether the property condition is acceptable prior to final execution of the Mortgage Release, as long as the BPO is dated within 90 days of the borrower’s approval for a Mortgage Release.

not previously ordered an interior BPO

must order an interior inspection of the property and verify the property is in acceptable condition within 60 days of the borrower’s acceptance of the Mortgage Release.

See E-3.3-03, Inspecting Properties Prior to Foreclosure Sale and D2-2-10, Requirements for Performing Property Inspections for the requirements related to performing property inspections.

If the property inspection or property valuation reveals that the subject property has been poorly maintained, needs major repairs, or has structural or foundation problems, see B-5-01, Insured Loss Events for additional information.

The servicer must submit the Mortgage Release request to Fannie Mae to receive prior written approval if the property inspection or property valuation reveals that the subject property contains environmental contamination or poses potential legal risks and the servicer determines that a Mortgage Release is the appropriate workout option. The servicer must follow the procedures in Requesting Approval for a Non-Delegated Mortgage Release Case in F-1-25, Requesting Fannie Mae’s Approval via Fannie Mae’s Servicing Solutions System for requesting Fannie Mae’s approval.

For more information please see: D2-3.3-02, Fannie Mae Mortgage Release (Deed-in-Lieu of Foreclosure).

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