The following table provides instructions for the servicer regarding the suspension of referrals, law firm matter transfers, and termination of law firms.
|If…||Then the servicer must…|
the servicer becomes aware of information regarding a law firm handling Fannie Mae default-related matters that might warrant a suspension of referrals, the transfer of matters to another law firm, and/or the termination of the law firm (for example, due to legal, reputational, or operational risk)
the servicer intends to suspend referrals and/or terminate a law firm
the servicer is transferring matters to another law firm
Note: If a foreclosure sale has already occurred, the servicer must obtain Fannie Mae’s prior approval before transferring a default-related matter to another law firm.
The servicer must retain all information relating to
its due diligence review,
its decision, and
all other information supporting its decision for the longer of any retention period applicable to the servicer, or seven years after the decision.
The servicer must make such information available to Fannie Mae upon request.
Fannie Mae reserves the right to direct the servicer to initiate an investigation of a law firm if it becomes aware of information that might warrant a suspension of referrals, the transfer of law firm matters, or termination of the law firm. Fannie Mae may itself conduct due diligence and investigations as necessary, and may instruct the servicer to suspend some or all new referrals, to transfer some or all of its matters, or to terminate law firms.
In the event of a decision by Fannie Mae to suspend new referrals, transfer matters, or terminate a law firm, Fannie Mae will inform the servicer of the decision and provide direction regarding required servicer actions.
The servicer is responsible for implementing any suspension, transfer of law firm matters, and/or termination unless otherwise directed by Fannie Mae.
The servicer must consider all pertinent factors when determining the proper implementation strategy for any suspension, law firm matter transfers, and/or termination, including:
the capacity of other eligible law firms in the jurisdiction to handle additional capacity and/or transferred matters,
the proration of fees between the transferor and transferee law firms,
avoiding duplicative fees and costs as a result of any transfer, and
the continuing availability of adequate errors and omissions coverage for a law firm as to which some matters are left for resolution following a suspension of referrals or partial transfer of matters.
With respect to any required matter transfer, the servicer must take all required steps to effectuate, manage, and monitor the transfer and report periodically to Fannie Mae regarding
the identity of each transferee law firm,
the identification and quantification of the matters transferred to each transferee law firm, and
the timing and status of the law firm matter transfer.
The servicer must not charge Fannie Mae or the borrower for any fees or costs associated with transferring matters, and such amounts must not be added to the borrower’s total indebtedness.
Fannie Mae reserves the right to manage any suspension, transfer of matters, and/or termination if it concludes that Fannie Mae's management is necessary to manage legal, reputational, or operational risks. The servicer must follow all reasonable instructions given by Fannie Mae.
The following table provides references to Announcements that are related to this topic.
|Announcement SVC-2016–04||May 11, 2016|