The servicer and the law firm may charge the borrower only those default-related legal expenses, including foreclosure and bankruptcy-related fees and costs, that are permitted under the terms of the note, security instrument, and applicable laws. The following table outlines additional servicer responsibilities for collecting legal fees, costs, and escrow or corporate advances from the borrower, where legally permissible, and paying the law firm for legal fees and costs.
|✓||The servicer must...|
|Include as part of the amount required to reinstate or pay off the mortgage loan
to the extent permitted by the terms of the note, security instrument, and applicable laws.
|Take all legally permissible steps to minimize the amount of uncollected fees, costs, and escrow or corporate advances, such as shortening the time period for which a reinstatement or payoff quote is valid or instructing the borrower to contact the servicer for updated figures.|
|Retain all records justifying its determination that any legal fees or costs, or escrow or corporate advances were not legally permissible to collect from the borrower, including the date the payoff or reinstatement quote was issued, the “good through” date for the payoff or reinstatement quote, and the date the fee, cost, or advance was actually incurred.|
|Ensure that all applicable and permissible legal fees and costs and escrow or corporate advances are collected from the borrower as a condition of the reinstatement, workout agreement, or payoff.|
|Pay the law firm for the fees and costs incurred by the law firm even if sufficient funds were not collected from the borrower.|
For more information please see: E-5-05, Prorated Attorney Fees / Reimbursement of Uncollected Fees, Costs or Advances