Servicing Guide

Published September 9, 2020

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What action must be taken after a charge-off is approved for a first lien mortgage loan?

For all approved charge-offs, the servicer must take the steps outlined in the following table.                                                                    

The servicer must...
 

Notify tax authorities that future tax bills should be sent to the borrower (if applicable).

 

Record the release of lien in the real property records

 

Inform the borrower in writing that

  • The lien against the subject property has been released,

  • The servicer will not/no longer pursue foreclosure proceedings, and

  • The borrower is responsible for the payment of property taxes, insurance, and maintenance of the property in accordance with applicable requirements.

 

Remove the mortgage loan from Fannie Mae's investor reporting system by reporting an Action Code 70 or 72 as indicated by Fannie Mae in its approval letter.

  • Note: To the extent feasible, Fannie Mae will require the charge-off and lien release to be conducted simultaneously, unless awaiting receipt of proceeds associated with the mortgage loan. In the event of proceeds, the servicer must remit the proceeds via the CRS as a “Special Remittance” using the Remittance Type as indicated by Fannie Mae in its approval letter. Also see the Investor Reporting Manual and Fannie Mae's CRS User Guide.

For more information please see Servicing Guide F-1-25: Requesting Fannie Mae’s Approval via Fannie Mae’s Servicing Solutions System. 

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If you have additional questions, Fannie Mae customers can visit Ask Poli to get information from other Fannie Mae published sources.

Guide Resources

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Visit Selling and Servicing Guide Communications and Forms

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