Fannie Revises Foreclosure Requirements

Current policy requires that when mortgage servicers refer a foreclosure to a trustee in the states of Arizona, California Washington, they must require that the trustee utilize a title company approved by Fannie Mae for obtaining evidence of title.

But the Washington, D.C.-based company is changing that policy.

Fannie’s servicing guide is being updated to eliminate the requirement that only title companies it has approved can be used, according to Servicing Guide Announcement SVC-2012-12.

“Effective immediately, Fannie Mae is eliminating the list of Fannie Mae-approved title companies and discontinuing this requirement,” the bulletin states. “The trustee retained by the servicer may select the title company of its choice for foreclosure title work provided the title product is consistent with applicable law.”

While specific guidance on title costs will soon be issued, servicers are being asked to keep foreclosure title costs down. Fannie is also asking that a title search, abstract or limited trustee sale guaranty be utilized instead of a full trustee sale guaranty when available and less expensive.

Servicers are prohibited from directly or indirectly requiring or encouraging the use specific title companies.

Fannie revised its maximum allowable foreclosure attorney fees for loans referred to an attorney on or after June 1. The fees include all steps required to complete a judicial or non-judicial foreclosure with the exception of fees for mediations and settlement conferences.

Among all the states listed, new non-judicial foreclosure fees were highest in Maryland at $1,600. Judicial foreclosure fees were highest in New Jersey at $2,425.

The updated allowable attorney and trustee foreclosure fees are available at eFannieMae.com.