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Fannie Mae – Reimbursements for Insurance Advances Following Foreclosure

Fannie Mae recently issued Announcement SVC-2018-4, which among other changes updated the Servicing Guide sections related to reimbursements for advances made to pay flood and hazard insurance premiums after a foreclosure sale.  In general, Fannie Mae will reimburse such advances for both escrowed and non-escrowed loans, even if the advances were made prior to the mortgage loan becoming delinquent. Per the recent Announcement:

  • If an insurance carrier refuses to return unearned insurance premiums, a Servicer must include a comment in its final request for reimbursement regarding the refusal, but the Servicer is no longer required to contact Fannie Mae’s SF CPM division to provide Fannie Mae with the name of the insurance carrier and the reason for the denial.
  • Fannie Mae will no longer bill Servicers for unearned insurance premiums owed to Fannie Mae.  Prior to the Announcement, the Servicing Guide provided that Fannie Mae would bill Servicers each month for all outstanding unearned premium refunds.

The billing changes are effective immediately. The expense reimbursement changes will become effective for reimbursement requests made on or after August 1, 2018, and will apply to escrow advances made on or after January 1, 2018. To view the affected Servicing Guide Sections click on the following links: E-4.4-04, Remitting Flood Insurance Settlement Proceeds or Unearned Premium Refunds E-4.4-02, Remitting Property Insurance Settlement Proceeds or Unearned Premium Refunds F-1-05, Expense Reimbursement