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E-3.1-02, Performing Due Diligence Prior to Considering Foreclosure (11/12/2014)

Performing Due Diligence Prior to Considering Foreclosure

The servicer of a portfolio mortgage loan, a participation pool mortgage loan that Fannie Mae holds in its portfolio, or of a special servicing option MBS loan, must protect Fannie Mae’s investment by making every reasonable effort to cure the delinquency through Fannie Mae’s various workout options before referring a mortgage loan for foreclosure proceedings. The servicer must complete the actions shown in the following table prior to referring a mortgage loan to foreclosure.

✓ The servicer must...
 

Inspect the property and analyze the individual circumstances of the delinquency.
 

Diligently investigate mortgage loans originated as investment properties and attempt to determine whether or not the borrower is collecting rental income from the property.

If the servicer suspects that the property or any unit(s) of the property is tenant occupied, it must take appropriate action to ascertain the actual occupancy status of the property. This includes completing detailed property inspections and conducting skip tracing.

Note: If the servicer learns of a change in mortgage loan status after referring the mortgage loan to foreclosure, the servicer must promptly notify the law firm of the change. Status changes include:

  • occupancy status,

  • rental income and amounts,

  • tenant information, and

  • lease information.

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