Servicing Guide

Published September 9, 2020

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E-1.2-01: Timing of the Bankruptcy Referral (11/12/2014)

The timeline for referring a case to a law firm will vary depending on the status of the mortgage loan at the time the bankruptcy case is filed.

See F-2-01, Bankruptcy Referral and Completion Timelines for additional information.

This topic contains the following:


Required Referral Timelines for Mortgage Loans Not Previously Referred for Foreclosure

The servicer may refer all delinquent mortgage loans in Chapter 7, 12, and 13 cases to a law firm for preparation of the proof of claim and, in Chapter 12 and 13 cases, review of the debtor’s plan. It is not necessary for these mortgage loans to be 60 days delinquent before being referred to a law firm. When the mortgage loan associated with a bankruptcy case has not previously been referred for foreclosure, the servicer must refer the mortgage loan to a law firm in accordance with the criteria presented in the following table.

Bankruptcy filed Required timelines for referral

Chapter 7, 12, or 13 cases

The servicer must send the referral no later than two weeks from the 60th day of delinquency.

If the mortgage loan is already 60 or more days delinquent when the borrower files, the servicer must send the referral no later than two weeks from the date of the bankruptcy filing.

The servicer must refer the case earlier to a law firm if it believes that the bankruptcy may affect the borrower's obligations under the terms of the note or mortgage, or if expedited relief from stay is otherwise necessary to protect Fannie Mae's interests.

Chapter 11

Regardless of whether the mortgage loan is current or delinquent when a borrower files, the servicer must refer the case to a law firm.

The servicer must send the referral no later than two weeks from the date of the bankruptcy filing.

The servicer is responsible for ensuring that the bankruptcy is appropriately handled prior to referral to a law firm.


Required Referral Timelines for Mortgage Loans Previously Referred for Foreclosure

When the mortgage loan associated with a bankruptcy case has been previously referred to a law firm for the initiation of foreclosure proceedings, the servicer must immediately

  • notify the law firm of the bankruptcy filing, and

  • send any required bankruptcy referral within two weeks from the date of the bankruptcy filing.

Bankruptcy referral requirements for mortgage loans previously referred to foreclosure are described in the following table.

If a law firm was already retained to conduct the foreclosure proceedings, then…

The same law firm must handle any subsequent bankruptcy case, unless the bankruptcy case is filed in a different jurisdiction and the servicer has not selected and engaged the law firm to perform legal services in that jurisdiction. In those cases, the bankruptcy must be handled by a law firm selected and retained by the servicer in the jurisdiction in which the bankruptcy case was filed.

The servicer must promptly forward all applicable information to the law firm and instruct the law firm to take all actions necessary to protect Fannie Mae’s interests.

When the bankruptcy case is resolved, the servicer must refer the case back to the law firm that originally received the foreclosure referral, assuming that

  • foreclosure is still necessary, and

  • the law firm’s engagement has not been terminated and no suspension of new referrals is in place.

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