Servicing Guide

Published September 9, 2020

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What are the procedures for requesting reimbursement of home owner association assessments and related expenses made to protect the lien priority of the property?

In accordance with Paying Assessments and Related Expenses Associated with Protecting the Priority of Fannie Mae’s Mortgage Lien  in B-1-01, Administering an Escrow Account and Paying Expenses, Fannie Mae will reimburse the servicer for HOA assessments and similar charges it must pay to the extent necessary to avoid a lien that takes priority over Fannie Mae’s mortgage lien under applicable law, and would extinguish Fannie Mae’s mortgage lien if foreclosed. 

Unless Fannie Mae has provided prior written approval for additional amounts, reimbursement is limited to the lowest of the 

  • actual advances paid,
  • maximum limit provided in the project declaration that would take priority over Fannie Mae’s mortgage lien, or 
  • state statutory maximums that would take priority over Fannie Mae’s mortgage lien. 

The servicer must maintain adequate records to document that reasonable and timely efforts were made to ensure it minimized the amount of any late fees, interest, and attorney fees, which may be included under the lien pursuant to applicable law. Such expenses must be excluded from the servicer’s request for reimbursement from Fannie Mae to the extent they directly result from the servicer’s failure to monitor and ensure the timely payment of the related assessments. 

The servicer must take the steps shown in the following table to obtain reimbursement of HOA assessments and related expenses. 

Step Servicer Action
1

Advance the funds to pay expenses.

2

Complete the foreclosure sale or acceptance of the Mortgage Release.

3

Submit a request for expense reimbursement.

For more information please see Servicing Guide F-1-05, Expense Reimbursement.

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