E-5-05, Reimbursing Law Firms/Reimbursement of Uncollected Fees, Costs or Advances (02/12/2020)

Fannie Mae has established attorney fee milestone invoicing schedules for judicial and non-judicial foreclosures.The following table outlines the requirements for handling invoices the law firms submits to the servicer.

The following table sets forth the milestone invoicing schedule for a judicial foreclosure action.

The following table sets forth the milestone invoicing schedule for a non-judicial foreclosure action.

If foreclosure proceedings are stopped (e.g., because the borrower files for bankruptcy, the mortgage loan is reinstated, or a workout agreement is executed) and foreclosure proceedings are subsequently recommenced, the fee paid to the law firm for the subsequent foreclosure proceedings will vary depending on whether the earlier proceedings can be resumed or must be started over. The following table outlines the servicer’s responsibilities for compensating the law firm for foreclosure attorney fees when a foreclosure is stopped.

If a bankruptcy referral is closed (e.g., bankruptcy case is closed or dismissed) prior to the law firm completing all the services covered by the bankruptcy legal service referral, the servicer must reimburse the law firm for attorney fees that have been prorated to reasonably relate to the amount of legal work actually performed by the law firm and actual, reasonable, and necessary costs incurred by the law firm.

The servicer and the law firm may charge the borrower only those default-related legal expenses, including foreclosure and bankruptcy-related fees and costs, that are permitted under the terms of the note, security instrument, and applicable laws.

The following table outlines additional servicer responsibilities for collecting legal fees, costs, and escrow or corporate advances from the borrower, where legally permissible, and paying the law firm for legal fees and costs.

The servicer cannot request that Fannie Mae reimburse it for any legal fees, costs, or escrow or corporate advances that it failed to include as part of the amount required to reinstate or pay off the loan, unless it was not legally permissible to collect the fees, costs, or escrow or corporate advances from the borrower. If it was not legally permissible to collect fees, costs, or escrow or corporate advances from the borrower, Fannie Mae will reimburse the servicer for such items to the extent that

• services were performed to protect Fannie Mae’s interests;

• services were actually rendered; and

• the fees, costs, or escrow or corporate advances were actual, reasonable, and necessary and complied with Fannie Mae’s guidelines.

The servicer must follow the procedures in F-1-05, Expense ReimbursementF-1-05, Expense Reimbursement, to request reimbursement for attorney fees, and other costs and/or escrow or corporate advances.