Servicing Guide

Published June 13, 2018

Inspecting a Property Securing a Delinquent Mortgage Loan

The servicer must order the initial property inspection by the 45th day of delinquency and complete the property inspection no later than the 60th day of delinquency for all delinquent mortgage loans. The following table outlines the servicer’s responsibilities for initiating and continuing property inspections on a property securing a delinquent mortgage loan.

The servicer must complete...
A property inspection every calendar month as long as the mortgage loan remains 45 or more days delinquent unless the property is borrower occupied and one of the following has occurred:
  • QRPC has been established within the last 30 days,

  • a full payment has been received within the last 30 days,

  • a repayment plan or a Trial Period Plan has been approved and the borrower is performing the plan, or

  • the borrower is performing under the applicable bankruptcy plan.

A final property inspection within 35 days prior to the foreclosure sale. See E-3.3-03, Inspecting Properties Prior to Foreclosure Sale for additional information.

If the servicer has not established QRPC while the mortgage loan remains delinquent, the servicer must continue attempts to achieve QRPC with the borrower, as described in D2-2-01, Achieving Quality Right Party Contact with a Borrower. The servicer of a first lien mortgage loan must continue property inspections every calendar month until the foreclosure sale, the execution of a Mortgage Release, or the mortgage loan becomes current.

Note: Fannie Mae will reimburse the servicer for all property inspections when the mortgage loan is delinquent.

The servicer must use a Property Inspection Report (Form 30) or its own form that provides equivalent information to document the property inspection. When a property inspection is required every calendar month, the property inspections must occur between 20 and 35 days apart. However, the servicer must complete more frequent property inspections when necessary (for example, when required by local ordinance, in high vandal areas, based on property condition, or during winter months).

The following table outlines the type of inspection the servicer must perform depending on the occupancy status.

If... Then the servicer must complete...
the property is vacant or abandoned an interior inspection as allowed by applicable law
the occupancy status of the property is
  • unknown, or

  • occupied (whether by borrower(s), tenant(s), or unknown occupant(s))

an exterior inspection

Note: Only in the following circumstances the servicer is authorized to consider a curbside (drive-by) inspection as an exterior inspection

  • when legal constraints due to compliance with applicable law including active bankruptcy, or

  • if there is potential danger to the inspector.

The servicer must maintain and make any checklists or other documentation relied upon to determine the occupancy status of a property available to Fannie Mae upon request. Fannie Mae reserves the right to require

  • revisions to the checklists,

  • the use of a prescribed form of checklist, or

  • affidavits of vacancy where necessary or appropriate to evidence the vacancy status.

See A4-2.1-02, Property Inspection Vendor Management and Oversight for information on property inspection vendor management.

The servicer must follow the procedures in Requesting Reimbursement for Property Inspections and Property Preservation Expenses in F-1-05, Expense Reimbursement for requesting reimbursement of property inspection fees.

The servicer of a second lien mortgage loan must take the actions listed in the following table.

The servicer must...
Complete a property inspection of the property securing the mortgage loan by the earlier of the following dates:
  • the date that it initiates foreclosure proceedings, or

  • the 45th day of delinquency.

Schedule subsequent property inspections as often as necessary to protect Fannie Mae’s interests. If the servicer initiates foreclosure proceedings, it must continue to complete property inspections every calendar month until it conducts the required property inspection prior to the foreclosure sale.

Inspecting and Repairing a Property in Disrepair

The servicer of a first lien mortgage loan must inspect the property immediately if it has information that the value of a property may be in jeopardy because of its condition. When an inspection discloses any condition detrimental to the value of the property or the need for urgent repairs, the servicer must remind the borrower of his or her obligation to maintain the property and take the action described in the following table depending on the borrower’s action.

If the borrower... Then the servicer...

agrees to arrange for the necessary repairs

must follow up until the repairs have been completed.

is willing to make the repairs, but is unable to do so

is authorized to ask Fannie Mae to advance the necessary funds by requesting expense reimbursement if the mortgage loan is a whole mortgage loan, a participation pool mortgage loan, or an MBS mortgage loan serviced under the special servicing options.

Note: Appropriate arrangements should be made for the borrower to repay the advance.

refuses to make repairs of an emergency nature

must arrange to have the repairs performed and advance the funds to make the necessary repairs.

Before the servicer of a second lien mortgage loan conducts a property inspection, it must contact the first lien mortgage loan servicer to determine when the property was last inspected to avoid a potential duplication of effort. If the servicer conducts a property inspection, it must notify the first lien mortgage loan servicer of the results of the property inspection and the borrower’s plans regarding any needed repairs. The following table describes the action that the servicer of a second lien mortgage loan must take depending on the borrower’s action.

If the borrower... Then the servicer...

agrees to arrange for the necessary repairs

must follow up until the repairs have been completed.

refuses to make the necessary repairs

must determine what action the first lien mortgage loan servicer intends to take. If the first lien mortgage loan servicer does not intend to take any action to repair the property, the servicer must contact its Fannie Mae Servicing Representative (see F-4-03, List of Contacts).

The servicer must follow the procedures in General Expense Reimbursement Requirements in F-1-05, Expense Reimbursement for advancing funds to make repairs and requesting reimbursement.

Inspecting and Protecting a Vacant or Abandoned Property

The servicer must inspect a property as soon as possible after it becomes aware of the possibility that the property may be vacant or abandoned.

When the property inspection confirms that the property is vacant, the servicer must take the actions listed in the following table.

The servicer must...

Make immediate arrangements to protect the property from vandalism and the elements to the extent that local laws allow such action. See Overview of General Servicer Duties and Responsibilities in A2-1-01, General Servicer Duties and Responsibilities and the Property Preservation Matrix and Reference Guide for additional information.

Attempt to locate the borrower to determine the reason for the vacancy.

Contact any other lienholders to determine if any action has been taken and their intentions.

Notify the property insurance carrier about the vacancy to ensure that appropriate insurance coverage is being maintained.

The following table describes the servicer’s next steps depending on the mortgage loan status if the property inspection confirms that the property is vacant.

If the property inspection confirms that the property is vacant and the mortgage loan is... Then the servicer must...

delinquent

complete a property inspection every calendar month as long as the mortgage loan remains 45 or more days delinquent without regard to whether QRPC, as described in D2-2-01, Achieving Quality Right Party Contact with a Borrower, has been established.

not delinquent

summarize its attempts to locate the borrower and its discussions with any other lienholders and submit a recommendation for further action to its Fannie Mae Servicing Representative (see F-4-03, List of Contacts).

The servicer must obtain a signed copy of the inspection report that first reported the vacancy, in which the person who completed the inspection certifies that he or she personally went to the property location and that the property is vacant.

An electronic signature is acceptable when obtaining a signed copy of the inspection report. See Selling Guide A2-5.1-03, Electronic Records, Signatures, and Transactions for additional information.

If a property is subsequently inspected and remains vacant, the continued vacancy status must be documented on the checklist or other document evidencing notes of the inspection, but no additional signature is required. If a property previously reported to be vacant becomes occupied, a new signed inspection report is required if the property becomes vacant.

Once the servicer has confirmed the property is abandoned, the servicer must complete an interior inspection every calendar month until the foreclosure sale date. Interior inspections may be conducted simultaneously with other required property inspections.

Related Announcements

The following table provides references to Announcements that are related to this topic.

Announcements Issue Date
Announcement SVC-2018-01 February 14, 2018
Announcement SVC–2017-06 July 12, 2017
Announcement SVC–2015–13 October 14, 2015
Announcement SVC–2015–11 August 12, 2015
Announcement SVC-2015–07 May 20, 2015