Servicing Guide

Published September 9, 2020

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What are the bankruptcy referral requirements for mortgage loans NOT previously referred to 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.

For more information please see: E-1.2-01: Timing of the Bankruptcy Referral.
 

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