Fannie Mae Servicing Guide E-1.2-02 — Timing of the Foreclosure Referral for Mortgage Loans Generally

Fannie Mae Servicing Guide E-1.2-02 — Timing of the Foreclosure Referral for Mortgage Loans Generally

E-1.2-02, Timing of the Foreclosure Referral for Mortgage Loans Generally (05/10/2023) For all mortgage loans secured by a principal residence, the servicer must refer the mortgage loan to foreclosure no earlier than the 121st day of delinquency unless applicable law permits earlier referral. If the servicer determines, in accordance with applicable law, that the property securing the mortgage loan is not, or is no longer the borrower’s principal residence, the servicer must refer the mortgage loan to foreclosure prior to the 121st day of delinquency as described below. Depending on the outcome of the prereferral review for mortgage loans not secured by a principal residence, the mortgage loan must be referred to a law firm for foreclosure no later than the 120th day of delinquency, except in circumstances where the borrower submits a BRP shortly before the foreclosure referral. See E-3.2-01, Conducting Prereferral Review and E-3.2-04, Postponing Foreclosure Referral for Mortgage Loans Not Secured by a Principal Residence for additional information. Foreclosure is considered to have begun on the date when the servicer refers the matter to a law firm. The servicer must maintain a record of the date of the referral in the mortgage loan file. Fannie Mae requires the servicer to contact its Fannie Mae Servicing Representative (see F-4-02, List of Contacts) if it becomes aware of environmental hazards that affect the security property. Regardless of whether Fannie Mae is named as a party in any environmental litigation, it must be considered non-routine and the servicer must immediately notify Fannie Mae’s Legal department by submitting a Non-Routine Litigation Form (Form 20). See also E-1.3-02, Reporting Non-Routine Litigation to Fannie Mae for additional information. The servicer must follow the procedures in Reporting Environmental Hazards to Fannie Mae in F-1-08, Managing Foreclosure Proceedings, for instructions specifically related to reporting environmental issues to Fannie Mae. Published May 13, 2026 406 See the Property Preservation Matrix and Reference Guide for additional information. Recent Related Announcements The table below provides references to recently issued Announcements that are related to this topic. Announcements Issue Date Announcement SVC-2023-03 May 10, 2023 E-1.2-03, Timing of the Foreclosure Referral for Second Lien Conventional Mortgage Loans Not Secured by a Principal Residence (11/12/2014) Foreclosure proceedings for a second lien mortgage loan that is not secured by a principal residence can begin when at least two full monthly payments are past due. In addition, even if a second lien mortgage loan that is not secured by a principal residence is not two full monthly payments past due, as long as the servicer has complied with SCRA requirements and any applicable state law that restricts the right to foreclose on a second lien mortgage loan, foreclosure proceedings can begin if the first lien mortgage loan is in default; and the second lien mortgage instrument includes a provision that the second lien mortgage loan will be considered in default, regardless of the status of its payments, if the first lien mortgage loan is in default. After the servicer sends the required breach letter as prescribed in D2-2-06, Sending a Breach or Acceleration Letter, its next action depends on whether the second lien mortgage loan has conventional MI. When the mortgage loan has MI, the servicer must determine if both the first and second lien mortgage loans are in default; and Fannie Mae has an interest in only one mortgage loan, or both the first and second lien mortgage loans. The terms of the recourse or credit enhancement arrangement under which Fannie Mae purchased or securitized an uninsured second lien mortgage loan will determine whether foreclosure proceedings will be initiated and the type(s) of actions the servicer must take. The servicer must contact its Fannie Mae Servicing Representative (see F-4-02, List of Contacts) by submitting a case through Fannie Mae’s servicing solutions system before making a decision to foreclose on any conventional second lien mortgage loan and/or to advance the funds to bring the first lien mortgage loan current. The servicer must refer the case to a law firm to begin foreclosure proceedings on a second lien mortgage loan Published May 13, 2026 407 that is not secured by a principal residence no later than 30 days after the date it issued the breach letter once a final determination is made to initiate foreclosure on such a mortgage loan. Recent Related Announcements There are no recently issued Announcements related to this topic.

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