Servicing Guide

Published June 13, 2018

E-5-02: Servicer Responsibilities Prior to Requesting Reimbursement of Attorney Fees and Costs (11/12/2014)

The servicer must instruct the law firm to submit all statements for fees and expenses for default-related legal services directly to the servicer. The following table outlines the responsibilities of the servicer prior to requesting reimbursement from Fannie Mae.

The servicer must...

Review and approve the attorney fees and costs to ensure they are in compliance with Fannie Mae guidelines, including the requirement that all costs be actual, reasonable, and necessary.

Ensure the legal services were performed in accordance with applicable law and professional standards of conduct.

Ensure fees and costs charged to borrowers are permitted under the terms of the note, security instrument, and applicable laws.

Ensure bills submitted by the law firm describe each item of cost in sufficient detail to clearly identify it as being an allowable fee or cost.

Examples of sufficient supporting details include:

  • a servicer’s explanation on a Florida mortgage loan that judgment for foreclosure was obtained as a result of an uncontested trial, or

  • an attorney invoice describing an expense as an attorney fee for a Chapter 13 bankruptcy court notification of default and stay termination.

Ensure attorney fees are prorated to reasonably relate to the amount of work actually performed.

Pay the fees and costs and retain paid invoices to substantiate all reimbursement requests.

Have appropriate policies, procedures, and controls to ensure compliance with Fannie Mae’s requirements.

The servicer must ensure the law firm can comply with Fannie Mae's excess fee process. If necessary, law firms can request excess fee training by contacting Fannie Mae's SF CPM division (see F-4-03, List of Contacts).

In accordance with the provisions of this chapter and the procedures in F-1-05, Expense Reimbursement, Fannie Mae will reimburse the servicer for Fannie Mae’s share of any attorney fees and actual, reasonable, and necessary out-of-pocket expenses it incurs for foreclosure or bankruptcy proceedings (including the cost of any required appraisal and any advances it has to make to cover escrow deficits) for a whole mortgage loan or a participation pool mortgage loan held in Fannie Mae's portfolio, or for a special servicing option MBS mortgage loan. The servicer must not deduct its expenses from any payments received from the bankruptcy trustee.