Fannie Mae Announces New Loss Mitigation Practices
If you are working on loan modifications, then you need to be very aware of new changes recently announced by Fannie Mae. Since it is quite likely that you will be dealing with loans owned by this entity, you must be very careful to observe a number of new rules and regulations governing navigation through loan modification programs.
Here is a basic summary of the new rules:
- Fannie Mae must give written approval each time files are transferred not only from law firm to law firm, but also from trustee to trustee.
Fannie Mae may refuse to reimburse fees or pay assessing fees if these transfers are not preapproved. - Servicers must use financial documentation no more than 90 days old.
This rule goes into effect on the first day of September, and will govern all loss mitigation efforts from that point forward. - Fannie Mae loans cannot be associated with outsourcing or referral fees.
This is not new, but Fannie Mae has released a statement that emphasizes this concern and prohibits business arrangements “tainted with an actual or perceived conflict of interest”[1]. This wording is sufficiently vague that you need to be very careful when dealing with these types of loan modifications to steer clear of any potentially problematic relationships. Work with your attorney on this one!
Do you think that these changes are for the better? While they could make real estate investing strategies harder to implement in some cases, they do seem to prevent a number of fraudulent activities on the part of lenders. What is your opinion?
Thank you for reading! Your comments and questions are welcomed below.
[1] http://www.mortgageorb.com/e107_plugins/content/content.php?content.6407