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Fannie Mae and Freddie Mac Selling/Servicing Guide Updates
Fannie Mae released announcements (SEL-2019-06 and svc1905) that updated its guidance on Servicer’s responsibilities when dealing with OFAC SDN list matches. Prior to the announcement, if during the servicer’s screening process the servicer identified a valid OFAC SDN list match, the servicer was required to contact Fannie Mae for direction on next steps.
Per the new servicing announcement, Fannie Mae directs servicers, effective immediately, in addition to notifying Fannie Mae within 24 hour of blocking or rejecting a mortgage transaction, to block and segregate the borrower’s escrow funds and cease all servicing activities.
Please note that one of the servicing activities servicers are required to stop is making payments for property and flood insurance premiums.
Some of the additional servicing activities Fannie requires servicers to cease, include:
•remittance of P&I payments to Fannie Mae,
•payments to taxing authorities,
•payments to mortgage insurers,
•collection activities, including performing property inspections,
•loss mitigation activities, and
Servicers should review the updated guide sections, A3-2-01, Compliance with Laws and A2-1-01, General Servicer Duties and Responsibilities, and revise its procedures accordingly.
Previously, Freddie Mac announced updates to requirements that remove several property management activities performed by Servicers for all Freddie loans with a foreclosure sale held, or a deed-in-lieu of foreclosure executed, on or after July 15, 2019 and all active REO properties as of July 15, 2019. Proctor would like to direct attention to Freddie Mac’s recently published Frequently Asked Questions pertaining to this topic.
Proctor will continue to monitor regulatory requirements and will provide updates as they develop.