F-1-05, Expense Reimbursement (12/18/2024)
- General Expense Reimbursement Requirements
- Reimbursement for Escrow Advances
- Reimbursement for HOA Assessments and Related Expenses
- Reimbursement for Expenses Associated with Workout Options
- Reimbursing Fannie Mae for a Workout Incentive Fee Related to a Cancelled Mortgage Loan Modification or Payment Deferral
- Reimbursement for Foreclosure Attorney Fee Milestones or Prorated Bankruptcy Attorney Fees
- Reimbursement for Property Inspections and Property Preservation Expenses
- Reimbursement for Recording Costs Associated with a Mortgage Loan Satisfaction or Charge-Off
- Reimbursement for Mortgage Insurance Premium Expenses
- Defined Expense Reimbursement Limits
- Reimbursement for Other Reimbursable Default-Related Legal Expenses
General Expense Reimbursement Requirements
The servicer must advance its own funds in accordance with Advancing Funds to Cover Expenses in
and Requirements When a Property’s Flood Zone Status Changes in .Reimbursement from Fannie Mae
To be eligible for reimbursement of either escrow or corporate advances from Fannie Mae, advances must be
-
necessary to protect Fannie Mae’s interest in the property, and
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made for a mortgage loan that is a
-
portfolio mortgage loan,
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participation pool mortgage loan, or
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special servicing option MBS mortgage loan.
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The servicer must also follow the requirements set forth in Chapter E-5, Requesting Reimbursements for Default-Related Expenses.
The servicer must take the steps shown in the following table to obtain reimbursement of funds advanced to cover expenses.
Step | Servicer Action |
---|---|
1 |
Advance the funds to pay expenses in a timely manner. |
2 |
Submit a request for expense reimbursement with required supporting documentation. |
3 |
Retain in the mortgage loan servicing file all supporting documentation for all requests for expense reimbursement. |
4 |
Ensure supporting documentation is available to Fannie Mae upon request. |
If Fannie Mae reimburses the servicer for an advance, and the mortgage loan is subsequently reinstated or subject to a completed retention workout option, the servicer must reimburse Fannie Mae within 60 days of the date of the reinstatement or the completed retention workout option all recoverable advances collected from the borrower at reinstatement or not included in the completed retention workout option.
When the servicer accepts a full reinstatement of the mortgage loan in accordance with
where Fannie Mae has reimbursed the servicer for its advances for foreclosure-related expenses including the costs of any preforeclosure property inspection, the servicer must repay the reimbursement within 60 days of the date the mortgage loan is reinstated.When repaying Fannie Mae in the instances required above, the servicer must remit the funds as a special remittance in accordance with Remitting a Special Remittance in
.When a property has been remapped into an SFHA and the servicer is unable to collect the applicable flood insurance premium from the borrower, Fannie Mae will advise the servicer if any of the remedies permitted under the mortgage loan should be pursued against the borrower.
Reimbursement for Escrow Advances
Fannie Mae will reimburse the servicer for real estate taxes and property and flood insurance premiums it advances to protect Fannie Mae’s interests when there are insufficient funds in the escrow account to cover payments (or for a non-escrowed mortgage loan). Such escrow advances are reimbursable even if the expenses were advanced prior to the mortgage loan becoming delinquent. However, to be eligible for reimbursement, the mortgage loan must have subsequently become delinquent. See also Defined Expense Reimbursement Limits further in this topic.
Reimbursement for HOA Assessments and Related Expenses
In accordance with
Unless Fannie Mae has provided prior written approval for additional amounts, reimbursement is limited to the lowest of the
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actual advances paid,
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maximum limit provided in the project declaration that would take priority over Fannie Mae’s mortgage lien, or
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state statutory maximums that would take priority over Fannie Mae’s mortgage lien.
The servicer must maintain adequate records to document that reasonable and timely efforts were made to ensure it minimized the amount of any late fees, interest, and attorney fees, which may be included under the lien pursuant to applicable law. Such expenses must be excluded from the servicer’s request for reimbursement from Fannie Mae to the extent they directly result from the servicer’s failure to monitor and ensure the timely payment of the related assessments.
The servicer must take the steps shown in the following table to obtain reimbursement of HOA assessments and related expenses.
Step | Servicer Action |
---|---|
1 |
Advance the funds to pay expenses. |
2 |
Complete the foreclosure sale or acceptance of the Mortgage Release. |
3 |
Submit a request for expense reimbursement. |
Reimbursement for Expenses Associated with Workout Options
Reimbursement for Payment Deferral Expenses and Fees
The servicer must pay any necessary and actual out-of-pocket expenses in accordance with the Servicing Guide associated with execution of a payment deferral.
The servicer must pay any out-of-pocket expenses, including, but not limited to, the following:
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required notary fees,
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recording costs,
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title costs, or
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any other allowable and documented expense.
Note: The above expenses must not be included in the non-interest bearing balance created by a payment deferral. With regard to expenses that are advanced to third-parties in accordance with this Guide and included in the non-interest bearing balance created by a payment deferral, the servicer will not automatically be reimbursed for expenses related to a payment deferral upon completion of the payment deferral, but instead must request reimbursement from Fannie Mae. The servicer must submit its request for expense reimbursement for expenses advanced and included in the non-interest bearing balance within 60 days of the completion of the payment deferral. See
for additional information.
Fannie Mae will reimburse the servicer for allowable out-of-pocket expenses in accordance with this Procedure.
With regard to mortgage loans for which the payment deferral remains in effect, servicing fees, guaranty fees, and excess servicing fees (if applicable) will be reimbursed at the time the mortgage loan matures or is paid-in-full through a credit to the servicer’s custodial account.
Reimbursement for Mortgage Loan Modification Expenses
The servicer must pay any necessary and actual out-of-pocket expenses in accordance with the Servicing Guide associated with the execution of a mortgage loan modification.
The servicer must pay any out-of-pocket expenses, including, but not limited to, the following:
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required notary fees,
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recording costs,
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title costs,
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property valuation fees,
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credit report fees, or
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other allowable and documented expense.
Fannie Mae will reimburse the servicer for allowable out-of-pocket expenses in accordance with this Procedure.
Reimbursement for Short Sale Expenses
The servicer may request reimbursement for Fannie Mae’s share of all expenses related to a short sale for a conventional mortgage loan, including the amount required to reimburse the servicer for the appraisal, by submitting a request for expense reimbursement.
Note: Uncollected late charges will not be reimbursed.
The servicer must retain the original invoices that support the expenses claimed in the mortgage loan servicing file.
For special servicing option MBS mortgage loans, the servicer must not request reimbursement for Fannie Mae’s share of the amount required to remove the mortgage loan (or participation interest in the mortgage loan) from the pool, since Fannie Mae will automatically reimburse the servicer for this amount after it remits the funds and reports the applicable action code required to remove the mortgage loan (or participation interest in the mortgage loan) from the pool. Also see the Investor Reporting Manual for additional information.
Reimbursement for Mortgage Release Expenses
Fannie Mae will reimburse the servicer for costs related to
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preparing documentation for a completed Mortgage Release (see Defined Expense Reimbursement Limits further in this topic), and
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obtaining a title update associated with execution of a Mortgage Release (provided the borrower is unable to pay).
Reimbursing Fannie Mae for a Workout Incentive Fee Related to a Cancelled Mortgage Loan Modification or Payment Deferral
For any mortgage loan modification or payment deferral that is cancelled but not re-entered into Fannie Mae’s servicing solutions system within 30 days of the date of the cancellation, the servicer must reimburse Fannie Mae within 60 days of the cancellation date any workout incentive fee previously paid by Fannie Mae to the servicer in connection with the cancelled mortgage loan modification or payment deferral.
Reimbursement for Foreclosure Attorney Fee Milestones or Prorated Bankruptcy Attorney Fees
In accordance with
, the servicer may request reimbursement of foreclosure or bankruptcy attorney fees paid to the law firm at established foreclosure milestones or when a bankruptcy proceeding is closed prior to completion, even if the full applicable allowable fee is not incurred.Reimbursement for Property Inspections and Property Preservation Expenses
Fannie Mae will reimburse the servicer for:
-
insured loss repair inspections on current and delinquent mortgage loans when required to confirm property repairs in accordance with
;
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all interior and exterior preforeclosure property inspections on delinquent mortgage loans (see
), as well as post-foreclosure sale inspections following a third-party sale (see ), completed in compliance with requirements of the Servicing Guide;
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property preservation work completed in accordance with
; and
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inspections on current and delinquent mortgage loans when required to determine the extent and nature of any property damage related to a disaster event in accordance with
.
For insured loss repair inspections and inspections performed on current mortgage loans related to a disaster event, the servicer may begin submitting requests for reimbursement immediately after the inspection is completed, but must submit its request no later than one year after the costs are incurred. For delinquent mortgage loans, refer to the time frames set forth in
.The servicer must refer to the Property Preservation Matrix and Reference Guide for additional details on preserving delinquent and vacant properties. Also see Defined Expense Reimbursement Limits further in this topic.
The following table describes the servicer’s responsibilities when requesting reimbursement for property inspection and/or property preservation expenses.
✓ | The servicer must... |
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Validate fees and costs prior to submitting a request for expense reimbursement to ensure the expenses are
|
|
Retain all individual invoices related to completed property inspections and property preservation work and make the invoices available to Fannie Mae upon request. |
|
Request reimbursement for the lesser of Fannie Mae’s maximum allowable reimbursement amount or the actual cost incurred by submitting a request for expense reimbursement (refer to Defined Expense Reimbursement Limits further in this topic for applicable reimbursement limits). |
Reimbursement for Recording Costs Associated with a Mortgage Loan Satisfaction or Charge-Off
The servicer should record mortgage loan satisfactions and lien releases with the county recorder or Land records office electronically, when possible. Fannie Mae will reimburse the servicer for any government-imposed recording costs it has to pay in connection with mortgage loan satisfactions in accordance with
if:-
the mortgage loan is a portfolio mortgage loan or a special servicing option MBS mortgage loan, and
-
applicable law and/or mortgage loan documents do not allow the servicer to charge the cost to the borrower.
Note: The servicer must not net costs for recording the satisfaction of a mortgage loan out of the proceeds received for the individual mortgage loan payoff.
Fannie Mae will also reimburse the servicer for costs it incurs to record the required release of lien in the real property records when a mortgage loan charge-off is approved in accordance with
.Fannie Mae will reimburse the servicer for the costs assessed to electronically file or record documents even if a free paper-filing option is available. Fannie Mae will also reimburse the servicer for fees paid to a third-party vendor to assist in such filing, except when an option to file or record electronically without vendor charges exists.
Reimbursement for Mortgage Insurance Premium Expenses
Fannie Mae will reimburse the servicer its costs for borrower-paid primary MI as required in accordance with
. The servicer is authorized to request reimbursement for servicing advances for MI renewal premiums that are paid after the date of default and through the month that any of the following events occurs:-
a third-party sale,
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a short sale,
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a foreclosure, or
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a Mortgage Release (deed-in-lieu of foreclosure).
If the servicer receives an MI premium refund from the mortgage insurer after receiving reimbursement of the MI premium from Fannie Mae, the servicer must remit the reimbursed funds to Fannie Mae through the CRS using the 336 receipt code within 30 days of Fannie Mae’s request, unless the servicer receives the MI premium refund following the repurchase of a bifurcated loan, in which case the servicer must follow
.Defined Expense Reimbursement Limits
This procedure contains the amount that Fannie Mae will pay for its share of expenses when specific reimbursement expense limits are defined. Also see the Allowable Foreclosure Attorney Fees Exhibit and the Allowable Bankruptcy Attorney Fees Exhibit for additional information regarding fees associated with either of these legal proceedings. In addition, also see the Property Preservation Matrix and Reference Guide for additional information concerning preservation work.
Defined Expense Reimbursement Limits | |
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Property Inspections |
|
Description |
Maximum Reimbursement Amount |
Interior Property Inspection |
$45/inspection |
Exterior Property Inspection |
$30/inspection |
Insured Loss Repair Inspection |
$60/inspection |
Workout Expenses |
|
Mortgage Release document preparation cost |
up to $650 each, upon completion |
Escrow Expenses |
|
Taxes |
Actual amount(s) that the servicer advanced to cover real estate tax payments when the escrow account has insufficient funds to pay the expense in a timely manner (see Advancing Funds to Cover Expenses in | and Reimbursement for Escrow Advances in this topic for further details).
Tax Penalties and Late Charges |
|
HOA Dues |
From the foreclosure sale date up to the REO sale date (disposition). Reimbursement of dues incurred prior to the foreclosure date will be decided per each state’s statutes. |
Property and Flood Insurance |
Actual amount(s) that the servicer advanced to cover property and/or flood insurance premiums when the escrow account has insufficient funds to pay the expense in a timely manner, less any applicable unearned premium refund amount the servicer received when a policy is canceled. Fannie Mae will reimburse the servicer for such advances for a period of up to 14 days after
See Reimbursement for Escrow Advances in this topic for further information. See also and |
Technology Fees and Electronic Invoicing |
|
Description |
Maximum Reimbursement Amount |
Technology Fees |
$25/mortgage loan for life of the default |
Electronic Invoicing |
$10/life of mortgage loan; $5 for submission of electronic invoice relating to a foreclosure and an additional $5 if a bankruptcy is filed on the same mortgage loan |
Property Preservation |
|
Description |
Maximum Reimbursement Amount |
A. Securing |
|
Knob lock or Knob lock with deadbolt |
$60 each |
Padlock or Hasp and Padlock |
$40 each |
Slider lock/Window lock |
$25 each |
Boarding |
$0.90/united inches (UI) |
Clearboarding |
Small (≤ 72 UI) = $185 Large (> 72 UI) = $285 |
Repair/Replace Windows |
Standard (≤ 36” × 36”) = $150 Large (> 36” × 36”) = $200 Life of loan cap = $600 |
Security Door |
$250/door |
Repair/Replace Exterior Door |
$350 for the life of the mortgage loan |
Repair/Replace Exterior Door Jamb |
$300 for the life of the mortgage loan |
Cover Exterior Dryer Vent |
$25 each — 1 per unit for the life of the mortgage loan |
Repair Garage Door |
$100/door for the life of the mortgage loan |
Pool Covers |
$1,200 for the life of the mortgage loan |
Repair/Replace Fence |
$300 for the life of the mortgage loan |
Repair/Replace Gate | $300 for the life of the mortgage loan |
Repair/Replace Lanai | $300 for the life of the mortgage loan |
B. Yard Service |
|
Initial Grass Cut and Desert Landscaping (Less than 12” height) |
For the life of the mortgage loan: Less than 10,000 sq ft — $125 each 10,001 — 15,000 sq ft — $175 each 15,001 — 25,000 sq ft — $200 each 25,001 — 35,000 sq ft — $225 each 35,001 — 43,560 sq ft — $250 each |
Grass Re-cut and Desert Landscaping |
Per instance: Less than 10,000 sq ft — $80 each 10,001 — 15,000 sq ft — $100 each 15,001 — 25,000 sq ft — $125 each 25,001 — 35,000 sq ft — $150 each 35,001 — 43,560 sq ft — $175 each |
Trim Trees/Shrubs/Vines |
$500/calendar year |
C. Winterization |
|
Dry Winterization |
$150 for the first unit for the life of the mortgage loan |
Wet/Steam Winterization |
$220 for the first unit for the life of the mortgage loan |
Radiant Winterization |
$260 for the first unit for the life of the mortgage loan |
Additional unit of any type of winterization |
$100 each for the life of the mortgage loan |
Re-Winterize |
$50 each/calendar year |
D. Health and Safety |
|
Cleaning Refrigerator and Stand Alone Freezer |
$100 each |
Moisture Control | $30 per product, $360/calendar year |
Address Discoloration | $400 for the life of the mortgage loan |
Cleaning Toilet |
$75 each, $375 maximum for the life of the loan |
Capping Wires |
$1 each |
Capping Gas/Water/Sewer Lines |
$25 each |
Extermination |
$100/calendar year |
Repair/Replace Deck | $300 for the life of the mortgage loan |
Install/Repair/Replace Exterior Handrails |
$300 for the life of the mortgage loan |
Repair/Replace Steps |
$150 for the life of the mortgage loan |
E. Raw Garbage, Perishable Debris, and Personal Property *Combined maximum of 10 cubic yards for the life of the mortgage loan |
|
Raw Garbage and Perishable Debris — Interior/Exterior |
*$50/cubic yard |
Move Personal Property — Interior/Exterior |
*$20/cubic yard |
Dead Vermin/Animal Removal |
$75 for the life of the mortgage loan |
Roof Cleaning | $100/calendar year |
F. Additional Allowable Items |
|
Aerial Imagery Report | $65 for the life of the mortgage loan |
Address Posting |
$50 for the life of the mortgage loan |
Chimney Cap |
$250/cap — 2 per unit for the life of the mortgage loan |
Clean/Reattach Gutters |
$100/calendar year |
Repair/Replace Gutters |
$300/calendar year |
Snow Removal |
$100 each clearing, $500/calendar year |
Repair/Replace Sump Pump |
$300 for the life of the mortgage loan |
Utility Transfers and Shut Off |
$100 for one time shut off/transfer fee of each |
Utility Service | $2,000 per initial utility service, $200 per service per month for the life of the mortgage loan |
Police/Fire Report |
$50 for the life of the mortgage loan |
Emergency Pump Water |
$500 for the life of the mortgage loan |
Graffiti Removal |
$200 for the life of the mortgage loan |
Repair/Replace Fascia | $160 for the life of the mortgage loan |
Repair/Replace Soffits | $200 for the life of the mortgage loan |
Plumbing Services | $150 for the life of the mortgage loan |
Vacancy Notice Posting | $35 for the life of the mortgage loan |
G. Damaged Properties |
|
Patch/Repair Roof |
$800 for the life of the mortgage loan |
Tarp Roof | $600 for the life of the mortgage loan |
H. Code Violations |
|
Code Violations/Citations | $1,000 per fine/fee/lien$3,000 for the life of mortgage loan |
I. Registration | |
Property Registration | Actual cost to register per local requirement |
Reimbursement for Other Reimbursable Default-Related Legal Expenses
In accordance with
, Fannie Mae will reimburse the servicer for the following out-of-pocket costs that it pays to third-party vendors or the courts, as long as the costs are actual, reasonable, and necessary (and are included in any applicable FHA, VA, RD, or MI claim that is filed):-
filing costs and other costs required by the courts (including fees paid to a third-party vendor to file electronically except when an option to file or record electronically without vendor charges exists);
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trustee sale guarantees or other title foreclosure litigation reports;
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costs for posting notices of foreclosure sales;
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costs for publication of legal notices (reimbursable for California non-judicial foreclosures only if the notices are placed as specified by Fannie Mae);
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costs for publication placement services for allowable jurisdictions;
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costs of announcing postponements of foreclosure sales;
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costs of servicing summonses and complaints and other legal notices for which the law requires personal service;
-
charges for brokers’ price opinions (or for appraisals, if Fannie Mae instructed the servicer to obtain them) that are obtained in connection with relief provisions, workout options, or if legally required to determine the amount of the foreclosure bid;
-
the cost of recording any legal documents necessary to conduct the foreclosure (such as notices of default, notices of sale, substitutions of trustees, assignments, satisfaction documents, deeds), including fees paid to a third-party vendor to electronically record except when an option to file or record electronically without vendor charges exists; and
-
other costs that Fannie Mae approves in advance, such as excess foreclosure title and publication costs, or that are specifically footnoted on the standard fee schedule that appears in Allowable Attorney Foreclosure Fees Exhibit.
Note: Fannie Mae will not reimburse the servicer for any expense incurred in preparing or recording an assignment of the mortgage loan from MERS to either the servicer or Fannie Mae. Reassigning and re-registering the mortgage with MERS is not required by Fannie Mae and any such action will be at the discretion or and expense of the servicer.
Fannie Mae will reimburse the servicer for postage costs incurred by law firms for first-class mail and certified or registered mail when required, provided the postage costs are incurred by the law firm retained by the servicer to handle Fannie Mae foreclosure and bankruptcy matters on mailings that are required by
-
state statute, or
-
court rule or court order.
Fannie Mae will not reimburse the servicer for postage costs incurred in connection with mailings by the servicer or law firm that are associated with servicer functions. Examples of mailings that are associated with servicer functions are
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demand and acceleration letters;
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communications with borrowers or third parties related to general servicing matters that are not required by state statute, court rule or order;
-
correspondence addressing allegations of servicing or organization error;
-
responses to Qualified Written Requests under RESPA; and
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responses to FDCPA letters.
All postage costs must be actual, reasonable, and necessary. Fannie Mae will not reimburse the servicer for the cost of
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mailing preparation services,
-
overnight mail,
-
stationery
-
envelopes, or
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postal meter rental.
Under the provisions of 12 U.S.C. §1723a (c)(2), Fannie Mae is exempt from the imposition of revenue or documentary stamps (or the like) that are imposed pursuant to state law. Therefore, Fannie Mae will not reimburse the servicer for those items if it pays them.
The table below provides references to recently issued Announcements that are related to this topic.
Announcements | Issue Date |
---|---|
December 18, 2024 | |
July 10, 2024 | |
October 11, 2023 | |
Announcement SVC-2023-01 | March 8, 2023 |
December 21, 2022 | |
Announcement SVC-2022-01 | February 9, 2022 |
Announcement SVC-2021-02 | March 10, 2021 |
Announcement SVC-2020-04 | September 9, 2020 |
Announcement SVC-2020-01 | February 12, 2020 |
Announcement SVC-2019-07 | November 13, 2019 |
Announcement SVC-2019-03 | May 15, 2019 |