Fannie Mae Servicing Guide D1-1-02 — Evaluating a First Lien Mortgage Loan for Charge-Off and Release of Lien

Fannie Mae Servicing Guide D1-1-02 — Evaluating a First Lien Mortgage Loan for Charge-Off and Release of Lien

D1-1-02, Evaluating a First Lien Mortgage Loan for Charge-Off and Release of Lien (09/11/2024) The servicer must review and submit to Fannie Mae for approval a request for approval to cease collection efforts on a delinquent mortgage loan when the following requirements have been met: the mortgage loan becomes 120 days delinquent, or the mortgage loan has reached maturity plus 120 days, all appropriate measures to collect under the Servicing Guide have been exhausted, and the servicer has deemed the debt to be uncollectable, the mortgage loan is secured by a property that was the borrower's principal residence at loan origination, any home on the property is currently occupied, and the land and any structures on the land are being maintained and preserved in compliance with municipal requirements as supported by property inspections, and at least one of the following conditions apply: a foreclosure sale cannot be completed for a first lien conventional mortgage loan that Fannie Mae owns or securitizes; the mortgage loan, or the property securing it, is the subject of an agreement to resolve a legal dispute, or a court has permitted the mortgage loan to be satisfied (see D1-6-02, Handling Notices of Liens, Legal Action, Other Actions Impacting Fannie Mae’s Interest ); Note: When an issue is presented that may pose a significant legal or reputational risk to Fannie Mae, the servicer must follow the procedures in accordance with E-1.3-01, General Servicer Responsibilities for Non-Routine Matters. the property securing the mortgage loan is or has been the subject of either: a government seizure (see D1-6-03, Handling Property Forfeitures and Seizures ); foreclosure by condominium/homeowner's association and the property has been sold; or a receivership proceeding and the property has been sold; Published May 13, 2026 253 the mortgage loan has an impediment or encumbrance making it impossible or impracticable to obtain clear title to the mortgaged premises, and the mortgage loan is not subject to repurchase as outlined in A1-3-02, Fannie Mae-Initiated Repurchases, Indemnifications, Make Whole Payment Requests and Deferred Payment Obligations ; the UPB is $5,000 or less and the total indebtedness is $15,000, or less; Note: In the event the UPB is greater than $5,000 or the indebtedness exceeds $15,000, and all other criteria has been met, the request may be submitted for consideration. the property securing the mortgage loan is a unit in a condominium, cooperative, or similar project, and either the unit is damaged, and the repair of the unit is not feasible because of the physical condition of the remainder of the project; or the project is not presently economically viable; or the governing body or a court has terminated the association; the property has suffered a natural or man-made disaster that results in earth movement (e.g., a landslide or a mudslide) such that rebuilding on the land is impracticable or impossible; or a third-party is willing to accept legal responsibility for the property securing the mortgage loan. Note: Confirmation of transfer of ownership to the third party will be required if the charge-off is approved. Fannie Mae must determine if a charge-off and release of the related first lien is the most beneficial outcome for the mortgage loan. The servicer must follow the procedures in F-1-24, Requesting Fannie Mae’s Approval via Fannie Mae’s Servicing Solutions System for detailed requirements related to requesting prior approval and, if approved, completing a charge-off/lien release, the Investor Reporting Manual for reporting a charge-off to Fannie Mae, and Reimbursement for Recording Costs Associated with a Mortgage Loan Satisfaction or Charge-Off in F-1-05, Expense Reimbursement . Recent Related Announcements The table below provides references to recently issued Announcements that are related to this topic. Announcements Issue Date Announcement SVC-2024-05 September 11, 2024 Announcement SVC-2019-03 May 15, 2019 Published May 13, 2026 254

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