E-1.3-01, General Servicer Responsibilities for Non-Routine Matters (10/11/2023)

Appropriately handle legal matters affecting Fannie Mae mortgage loans.

Notify Fannie Mae’s Legal department of any non-routine litigation by submitting a Non-Routine Litigation Form (Form 20).

Note: Fannie Mae reserves the right to direct and control all litigation involving a Fannie Mae mortgage loan, and the servicer and any law firm handling the litigation must cooperate fully with Fannie Mae in the prosecution, defense, or handling of the matter.

Obtain Fannie Mae’s prior written approval before either

• removing a case to federal court based on Fannie Mae’s Charter, or

• appealing or otherwise challenging judgment in any foreclosure or bankruptcy proceeding.

Note: The servicer must also notify Fannie Mae’s Legal department by submitting Form 20 if a borrower files an appeal or seeks other post-judgment relief in a foreclosure or bankruptcy proceeding.

Periodically update Fannie Mae on the progress of non-routine litigation as necessary and appropriate.

Provide Fannie Mae with sufficient opportunity in advance of any deadline or due date to review and comment upon proposed substantive pleadings, including:

• motions,

• responses,

• replies, and

• briefs.

Notify retained counsel of its proposal to offer any payment deferral or mortgage loan modification and provide counsel with sufficient opportunity in advance of the solicitation to review and provide comments in connection with any solicitation materials. See D2-3.2-04, Payment DeferralD2-3.2-04, Payment Deferral,  D2-3.2-05, Disaster Payment DeferralD2-3.2-05, Disaster Payment Deferral, and D2-3.2-06, Fannie Mae Flex ModificationD2-3.2-06, Fannie Mae Flex Modification for additional information.

Actions that seek monetary relief against Fannie Mae.

Any claim (including counterclaims, cross- claims, or third-party claims in foreclosure or bankruptcy actions) for damages against Fannie Mae or its officers, directors, or employees.

Actions that challenge the validity, priority, or enforceability of a Fannie Mae mortgage loan or seek to impair Fannie Mae’s interest in an acquired property.

An action seeking to demolish a property as a result of a code violation;

An action seeking to avoid a lien based on a failure to comply with a law or regulation;

An attempt by another lienholder to assert priority over Fannie Mae’s lien or extinguish Fannie Mae’s interests;

A quiet title action seeking to declare Fannie Mae’s lien void; or

An attempt by a borrower to affect a cramdown of a mortgage loan in bankruptcy. 

Actions that present an issue that may pose significant legal or reputational risk to Fannie Mae.

Any issue involving Fannie Mae’s conservatorship, its conservator FHFA, Fannie Mae’s status as a federal instrumentality, or an interpretation of Fannie Mae’s Charter;

Any contention that Fannie Mae is a federal agency or otherwise part of the United States Government;

Any “due process” or other constitutional challenge;

Any challenge to the methods by which Fannie Mae does business;

Any putative class action involving a Fannie Mae mortgage loan;

A challenge to the standing of the servicer to conduct foreclosures or bankruptcies that, if successful, could create negative legal precedent with an impact beyond the immediate case;

A challenge to the methods by which MERS does business or to its ability to act as nominee under a mortgage;

Any “show cause orders” or motions for sanctions relating to a Fannie Mae mortgage loan, whether against Fannie Mae, the servicer, a law firm, or a vendor of the servicer or law firm;

Any foreclosure on Native American tribal lands;

Any environmental litigation relating to a Fannie Mae loan;

A need to foreclose judicially in a state where non-judicial foreclosures predominate;

Any claim invoking a Fannie Mae HAMP as a basis to challenge a foreclosure;

Any cross-border insolvency proceeding under Chapter 15 of the Bankruptcy Code;

Any claim of predatory lending or discrimination in loan origination or servicing; or

Any claim implicating the interpretation of the terms of the Fannie Mae/Freddie Mac Uniform Mortgage Instruments.