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D1-6-02, Handling Notices of Liens, Legal Action, Other Actions Impacting Fannie Mae’s Interest (05/10/2023)

This topic contains information on handling notices of liens, legal action, other actions impacting Fannie Mae’s interest.

Handling Notices of Liens, Legal Action, Other Actions Impacting Fannie Mae’s Interest

Fannie Mae reserves the right to direct and control all litigation involving a Fannie Mae mortgage loan, and the servicer and any law firm handling the litigation must cooperate fully with Fannie Mae in the prosecution, defense, or handling of the matter. The servicer must describe Fannie Mae as “Federal National Mortgage Association (“Fannie Mae”), a corporation organized and existing under the laws of the United States of America” in legal proceedings. Fannie Mae may not be referred to as a government agency.

The servicer must not initiate legal proceedings or intervene in legal proceedings on Fannie Mae’s behalf without Fannie Mae’s prior written approval, with the exception of routine foreclosures, bankruptcy matters, and possessory actions for certain mortgage loans.

The servicer must take all reasonable actions to prevent new liens that would be superior to Fannie Mae’s mortgage lien from being attached against the property. The servicer must refer to the Property Preservation Matrix and Reference Guide for further clarification on handling code violations, liens, condemnation, demolition, and similar issues on vacant or abandoned properties securing a delinquent mortgage loan.

From time to time, servicers may be served with a summons and complaint relating to a Fannie Mae mortgage loan (e.g., a condemnation action, a probate proceeding, a partition action, a quiet title action, a code violation notice, a tax sale, or a subordinate loan foreclosure). The servicer is responsible for handling these types of legal actions, including retaining any legal counsel necessary to represent Fannie Mae’s interests. The following table outlines the servicer’s responsibilities upon receipt of notice of a legal action impacting Fannie Mae’s interest.

The servicer must...

Notify Fannie Mae’s Single Family Legal department immediately of any non-routine litigation and certain matters requiring escalation as required in accordance with this Guide by submitting a Non-Routine Litigation Form (Form 20). See E-1.3-02, Reporting Non-Routine Litigation to Fannie MaeE-1.3-02, Reporting Non-Routine Litigation to Fannie Mae for additional information.


Use counsel selected and engaged pursuant to Fannie Mae’s requirements. See A4-2.2-01, Selecting and Retaining Law FirmsA4-2.2-01, Selecting and Retaining Law Firms for additional information.

Note: If a legal proceeding involves allegations that would trigger Fannie Mae’s right to indemnification from the servicer (e.g., allegations of origination issues or servicing errors), the servicer is authorized to retain any counsel of its choice.


Obtain excess fee approval from its Fannie Mae Servicing Representative (see F-4-02, List of ContactsF-4-02, List of Contacts) if the legal proceeding does not involve allegations that would trigger Fannie Mae’s right to indemnification from the servicer.


Instruct counsel to

  • notify the borrower about their responsibility for expenses when the deed of trust or mortgage loan provides for the borrower to reimburse any legal fees or costs incurred by the servicer, and

  • handle such matters by stipulation or any other expeditious matter that will reduce fees and costs.


Notify Fannie Mae’s Project Standards Team (see  F-4-02, List of ContactsF-4-02, List of Contacts) if, for a condo association, co-op corporation or PUD project, the servicer is advised of any proposed action that requires the consent of a specified percentage of the mortgage loan holders in the project, the servicer must contact Fannie Mae immediately with its recommendation regarding the proposed action.

MERS Notices: If the servicer receives an electronic notice from MERS related to a mortgage loan that it services for Fannie Mae, it must take the actions listed in the following table.

The servicer must...

Take appropriate and timely action based on the notice.


Advise MERS that it is the servicer for any notice in which the servicer is unidentified but becomes aware by checking all electronic messages on a daily basis.

The servicer of a co-op share loan must protect Fannie Mae’s interest in the share loan under the terms of any recognition agreement.

Recent Related Announcements

The table below provides references to recently issued Announcements that are related to this topic.          

Announcement Issue Date
Announcement SVC-2023-03 May 10,2023