General Expense Reimbursement Requirements

The servicer must advance its own funds in accordance with Advancing Funds to Cover Expenses in B-1-01, Administering an Escrow Account and Paying Expensesand Requirements When a Property’s Flood Zone Status Changes in B-3-01, Flood Insurance Requirements Applicable to All Property Types.

Requesting 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

  • made for a mortgage loan that is a

    • portfolio mortgage loan,

    • participation pool mortgage loan, or

    • special servicing option MBS mortgage loan.

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, any subsequent repayment by the borrower must be used to repay Fannie Mae.

When the servicer accepts a full reinstatement of the mortgage loan in accordance with E-3.2-08, Processing Reinstatements During Foreclosurewhere 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 by remitting the funds as a special remittance in accordance with Remitting a Special Remittance in F-1-23, Remitting and Accounting to Fannie Mae.

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.

Requesting 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.

Requesting Reimbursement for HOA Assessments and Related Expenses

In accordance with Paying Assessments and Related Expenses Associated with Protecting the Priority of Fannie Mae’s Mortgage Lien in B-1-01, Administering an Escrow Account and Paying Expenses, Fannie Mae will reimburse the servicer for HOA assessments and similar charges it must pay to the extent necessary to avoid a lien that takes priority over Fannie Mae’s mortgage lien under applicable law, and would extinguish Fannie Mae’s mortgage lien if foreclosed.

Unless Fannie Mae has provided prior written approval for additional amounts, reimbursement is limited to the lowest of the

  • actual advances paid,

  • maximum limit provided in the project declaration that would take priority over Fannie Mae’s mortgage lien, or

  • 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.

Requesting Reimbursement for Expenses Associated with Workout Options

Requesting Reimbursement for Mortgage Loan Modification Expenses

The servicer must pay any 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:

  • required notary fees,

  • recordation fees,

  • title costs,

  • property valuation fees,

  • credit report fees, or

  • other allowable and documented expense.

Fannie Mae will reimburse the servicer for allowable out-of-pocket expenses in accordance with this Procedure.

Requesting 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.

Requesting Reimbursement for Mortgage Release Expenses

Fannie Mae will reimburse the servicer for costs related to

  • preparing documentation for a completed Mortgage Release (see Defined Expense Reimbursement Limits further in this topic), and

  • obtaining a title update associated with execution of a Mortgage Release (provided the borrower is unable to pay).

Reimbursing Fannie Mae for a Cancelled Mortgage Loan Modification

For any mortgage loan modification that is cancelled by the servicer but not re-entered into Fannie Mae’s servicing solutions system within 30 days of the date of the cancellation, the servicer must refund Fannie Mae within 60 days of the cancellation date any requested amounts paid by Fannie Mae to the servicer in connection with the cancelled mortgage loan modification.

Requesting Reimbursement for Prorated Attorney Fees

The servicer may request reimbursement of prorated attorney fees in accordance with E-5-05, Prorated Attorney Fees / Reimbursement of Uncollected Fees, Costs or Advances. To request reimbursement, the servicer must comply with the instructions shown in the following table.

The servicer must...

Include any information that Fannie Mae needs to verify the accuracy of the requested amount, including:

  • a description of the work performed;

  • a copy of Fannie Mae’s written approval of any additional fees, if applicable; and

  • an explanation of how the prorated fee was derived.

Distinguish between prorated attorney fees and the law firm’s out-of-pocket costs.

Submit the request for expense reimbursement to Fannie Mae.

Requesting 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 B-5-01, Insured Loss Events;

For insured loss repair inspections and inspections performed on current mortgage loans related to a disaster event, the servicer may befin 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 E-5-01, Requesting Reimbursement for Expenses.

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...

Validate fees and costs prior to submitting a request for expense reimbursement to ensure the expenses are

  • reasonable and necessary to protect Fannie Mae’s interest, and

  • compliant with Fannie Mae’s guidelines.

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 Limitsfurther in this topic for applicable reimbursement limits).

Requesting Reimbursement for Recordation Fees

In accordance with C-1.2-05, Charging for a Release of Lien, the servicer must complete the steps in the following table in order to request reimbursement for recordation fees it must pay in connection with mortgage loan satisfactions.

Step Servicer Action
1

At the end of each calendar quarter, create an itemized list of

  • the individual mortgage loans,

  • their respective states, and

  • the related fees paid during that quarter.

2

Complete a request for expense reimbursement.

3

Send the completed request for expense reimbursement and itemized list to Fannie Mae’s SF CPM division (see F-4-03, List of Contacts).

Note: The servicer must not net fees for recording the satisfaction of a mortgage loan out of the proceeds received for the individual mortgage loan payoff.

Fannie Mae will reimburse the servicer for any government-imposed recordation fees it has to pay in connection with mortgage loan satisfactions if:

  • the mortgage loan is a portfolio mortgage loan or a special servicing option MBS mortgage loan; and

  • applicable law and/or the mortgage loan documents do not allow the servicer to charge the fee to the borrower.

Requesting Reimbursement for Mortgage Insurance Premium Expenses

Fannie Mae will reimburse the servicer its costs for borrower-paid primary MI as required in accordance with B-8.1-02, Paying Conventional Mortgage Insurance Premiums. 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,

  • a short sale,

  • a foreclosure, or

  • 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 A1-3-03, Repurchase Obligations Related to Bifurcated Mortgage Loans.

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

Property Inspections

Description

Maximum Reimbursement Amount

Interior Property Inspection

$20/inspection

Exterior Property Inspection

$15/inspection

Insured Loss Repair Inspection

$60/inspection

Workout Expenses

Mortgage Release document preparation cost

up to $400 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 B-1-01, Administering an Escrow Account and Paying Expenses and Requesting Reimbursement for Escrow Advances in this topic for further details).

Tax Penalties and Late Charges

  • Late charges and penalties are not payable on escrowed mortgage loans.

  • The first set of late charges and penalties for each tax type, for non-escrowed mortgage loans.

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 Insurance

Actual amount(s) that the servicer advanced to cover property 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

  • the date the property appears on the Vacancy Report in HomeTracker as an acquired property,

  • the closing date for a short sale, or

  • for a third-party sale the later of the date the sale is completed (including funds received), or when applicable, the date the court confirms or ratifies the sale.

See Requesting Reimbursement for Escrow Advances in this topic for further information. See also E-4.4-02, Remitting Property Insurance Settlement Proceeds or Unearned Premium Refunds.

Flood Insurance

Actual amount(s) that the servicer advanced to cover 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.

See Requesting Reimbursement for Escrow Advances in this topic for further information. See also E-4.4-04, Remitting Flood Insurance Settlement Proceeds or Unearned Premium Refunds

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/Gate/Lanai

$400 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 — $100 each

10,001 — 15,000 sq ft — $150 each

15,001 — 25,000 sq ft — $175 each

25,001 — 35,000 sq ft — $200 each

35,001 — 43,560 sq ft — $225 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

$250/calendar year ($500/calendar year HI & FL)

C. Winterization

Dry Winterization

$100 for the first unit for the life of the mortgage loan

Wet/Steam Winterization

$150 for the first unit for the life of the mortgage loan

Radiant Winterization

$250 for the first unit for the life of the mortgage loan

Additional unit of any type of winterization

$50 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 $50 per product install$300/calendar year
Address Discoloration $2/square foot$300 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

Install/Repair/Replace Exterior Handrails

$10/linear foot, $200 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

*$40/cubic yard

Move Personal Property — Interior/Exterior

*$20/cubic yard

Dead Vermin/Animal Removal

$75 for the life of the mortgage loan

Roof Cleaning $50/cubic yard$100/calendar year

F. Additional Allowable Items

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 Gutters

$1/linear foot, $100/calendar year

Repair/Reattach Gutters

$2/linear foot, $150/calendar year

Snow Removal

$75 each clearing, $375/calendar year

Repair/Replace Sump Pump

$300 for the life of the mortgage loan

Utility Transfers and Shut Off

$75 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 $8/linear foot$160 for the life of the mortgage loan
Repair/Replace Soffits $10/linear foot$200 for the life of the mortgage loan
Plumbing Services $150 for the life of the mortgage loan
Vacancy Notice Posting $10 for the life of the mortgage loan

G. Damaged Properties

Patch/Repair Roof

$2/sq ft,, $800 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

Foreclosure Expenses

Publication Placement

$35 per foreclosure referral

Posting Notice of Foreclosure Sale

$75 per foreclosure referral for the following counties in the State of California:

  • Los Angeles

  • Orange

  • Riverside

  • San Diego

  • San Bernardino

$125 per foreclosure referral for all other counties in the State of California

Requesting Reimbursement for Other Reimbursable Default-Related Legal Expenses

In accordance with E-5-07, Other Reimbursable Default-Related Legal Expenses, 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 when the court requires the attorney to use the vendor in order to file electronically);

  • trustee sale guarantees or other title foreclosure litigation reports;

  • costs for posting notices of foreclosure sales (see Defined Expense Reimbursement Limits within this topic);

  • costs for publication of legal notices (reimbursable for California non-judicial foreclosures only if the notices are placed as specified by Fannie Mae);

  • costs for publication placement services for allowable jurisdictions (see Defined Expense Reimbursement Limits within this topic);

  • costs of announcing postponements of foreclosure sales;

  • 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 the conduct of 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 when the county recorder/ Land Evidence records requires the attorney to use the vendor in order to electronically record the documents; 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

  • demand and acceleration letters;

  • 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

  • responses to FDCPA letters.

All postage costs must be actual, reasonable, and necessary. Fannie Mae will not reimburse the servicer for the cost of

  • mailing preparation services,

  • overnight mail,

  • stationery

  • envelopes, or

  • 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.

Related Announcements

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

Announcements Issue Date
Announcement SVC-2018-05 August 15, 2018
Announcement SVC-2018-04 June 13, 2018
Announcement SVC-2017-11 December 13, 2017
Announcement SVC-2017-10 November 8, 2017
Announcement SVC-2017-09 October 11, 2017
Announcement SVC-2017-08 September 13, 2017
Announcement SVC-2017-06 July 12, 2017
Announcement SVC-2017-05 June 21, 2017
Announcement SVC-2017-04 April 12, 2017
Announcement SVC-2017–01 January 18, 2017
Announcement SVC-2016–10 November 9, 2016
Announcement SVC-2017-09 October 11, 2017
Announcement SVC–2016–09 October 19, 2016
Announcement SVC–2016–05 June 8, 2016
Announcement SVC–2016–04 May 11, 2016
Announcement SVC–2016–03 April 13, 2016
Announcement SVC–2015–15 December 16, 2015
Announcement SVC–2015–14 November 25, 2015
Announcement SVC–2015–12 September 9, 2015
Announcement SVC–2015–07 May 20, 2015
Announcement SVC–2015–04 March 18, 2015
Announcement SVC–2014–21 December 10, 2014