Servicing Guide

Published December 12, 2018

E-4.1-02: Eliminations and Rescissions of Foreclosure Sales (11/12/2014)

This topic contains the following:

General Requirements for Eliminations and Rescissions of Foreclosure Sales

This topic contains Fannie Mae’s requirements for eliminations and rescissions of foreclosure sales. “Elimination” is the process of removing a property from Fannie Mae’s REO inventory system of record. “Foreclosure Sale Rescission” is the legal process of reversing a foreclosure sale and removing Fannie Mae as titleholder to the property. When the servicer identifies an issue that requires an elimination and/or rescission of the foreclosure sale, the servicer must submit a request for elimination and/or rescission within five days.

There are circumstances in which a foreclosure sale rescission may not involve elimination. However, if an REOgram has been submitted with an associated foreclosure sale, an elimination will also be necessary. To submit a request for elimination and/or rescission, the servicer must complete and submit the Elimination/Rescission Request Template. The template can also be obtained by emailing Fannie Mae’s SF CPM division (see F-4-03, List of Contacts) and must also be submitted to that same email address once completed.

When Fannie Mae identifies an issue that requires a property to be eliminated from its REO inventory or a foreclosure sale to be rescinded, Fannie Mae will initiate the elimination and/or rescission process. Fannie Mae will send the Elimination/Rescissions Daily Report to the servicer. The report will list Fannie Mae’s decision for each servicer-requested elimination or rescission, as well as those eliminations and/or rescissions that Fannie Mae has processed. The servicer must complete the actions listed in the following table.

The servicer must...

Review the Elimination/Rescissions Daily Report for notification of servicer-requested elimination/rescission approvals and Fannie Mae-processed eliminations/rescissions.

Add each eliminated file back into its servicer system within 24 hours of notification of approval or notification that the file has been eliminated by Fannie Mae.

Resume managing the eliminated/rescinded file pursuant to the Servicing Guide.

Work with the law firm that handled the foreclosure to ensure that any necessary activities to complete the elimination and/or rescission are coordinated in a timely fashion.

If a new foreclosure sale takes place or other actions are taken to validate the foreclosure sale, a new REOgram must be submitted within 24 hours of the action.

Upon elimination and/or rescission of the foreclosure sale, the servicer is responsible for transferring title into the appropriate party’s name and removing Fannie Mae from title in accordance with Correcting Conveyances to Fannie Mae in A2-1-03, Execution of Legal Documents. The servicer must initiate any required steps to restore title to the appropriate party within two days of the elimination and/or rescission notification. The servicer, however, must adhere to specific local and state law recordation requirements, as applicable.

Compensatory Fees for Foreclosure Rescissions

Fannie Mae may assess the servicer a compensatory fee for any failure to follow Fannie Mae guidelines or other servicing error or alleged error that results in a rescission of a foreclosure sale. Fannie Mae will not reimburse foreclosure fees and costs that are required to complete a new foreclosure following rescission. See A1-4.2-02, Compensatory Fees for Delays in the Liquidation Process for additional information on compensatory fees.