Posted on Wednesday, September 15, 2010
Fannie Mae recently issued a new servicing guide regarding pre-foreclosure mediation for mortgage loans in Florida.
Last December, the Florida Supreme Court issued an administrative order mandating mediation sessions before a summary judgment or foreclosure sale can be held.
The statewide program aims to open up communication between lenders and distressed borrowers prior to foreclosure proceedings, in the hopes of lessening the swell of foreclosure cases that are still clogging the court systems in the Sunshine State. Florida has been ranked as having one of the nation’s highest foreclosure rates since the onset of the housing crisis.
In adherence to the Supreme Court mandate, Fannie Mae will now require that servicers assign delinquent mortgage loans secured by properties in Florida to an attorney from Fannie Mae’s Retained Attorney Network for mediation prior to the initiation of foreclosure proceedings.
The new policy applies to mortgages held in Fannie Mae’s portfolio and those that are part of a mortgage-backed securities (MBS) pool that have the special servicing option, or a shared-risk MBS pool for which Fannie Mae markets the acquired property.
“Servicers are strongly encouraged to establish a dedicated team to address the detailed and accelerated timelines required” under the state’s mediation program, the GSE said in its announcement.
Servicers with mortgage loans secured by properties in Florida must provide Fannie Mae and all retained attorney firms in Florida with contact information for a primary liaison/team to whom all inquiries and documents should be directed for the mediation process no later than Wednesday, September 15, the guidelines state.
As a result of these new policies and procedures, the servicer shall have additional responsibilities, Fannie Mae said, as well as different collection and outreach timeline requirements for mortgaged properties in the state of Florida.
These new guidelines for Fannie’s pre-file mediation process must be implemented no later than January 1, 2011. However, for mortgage loans that are newly referred on or after September 15, 2010 by the servicer to the Retained Attorney Network to commence foreclosure proceedings, the attorney must screen the mortgage loan to determine is eligibility for pre-file mediation and proceed accordingly.
The Florida Supreme Court’s order requires that servicers offer mediation to residential borrowers after a foreclosure is filed. Fannie Mae is taking the mediation requirement on step higher and implementing a pre-file mediation program across the state for its servicers.
The GSE says its new policy is intended to improve the likelihood of converting delinquent borrowers to performing status by offering mediation and related workout options in earlier stages of delinquency; and facilitate a shorter timeline to foreclosure sale where mediation is either not accepted by the borrower or does not yield an agreement or a workout.