Consumer Law

Fannie Mae?s Miscellaneous Servicing Guidelines Changes

By M. Stan Herring

ForeclosureIndustry.com has posted an article that discusses the changes to Fannie Mae that were decided upon on March 30th of this year. Beginning May 1, 2010, MERS cannot be named as a plaintiff in any foreclosure case whether it's judicial, non-judicial or if the mortgage was securitized or if the loan was/is owned by Fannie Mae.

MERS is the mortgagee of record when either a mortgage names MERS as the original mortgagee and is recorded in the applicable land records, or a completed and recorded assignment names MERS as the mortgage assignee. Therefore, when MERS is the mortgagee of record, the servicer must prepare a mortgage assignment from MERS to the servicer, and then bring the foreclosure in its own name, unless Fannie Mae specifically requires that the foreclosure be brought in the name of Fannie Mae. In that event, the assignment must be from MERS to Fannie Mae, in care of the servicer at the servicer?s address for receipt of notices. In all cases, the assignment from MERS to the servicer or Fannie Mae must be recorded before the foreclosure begins.

Fannie Mae also won't reimburse for any expenses from preparing or recording from the "assignment of the mortgage loan from MERS to the servicer or to Fannie Mae."

If an assignment has been recorded from MERS to either the servicer or Fannie Mae and the borrower reinstates the mortgage loan prior to completion of the foreclosure proceedings, the servicer need not re-assign the mortgage to MERS and re-register the mortgage with MERS. Re-assigning and re-registering the mortgage with MERS is not required by Fannie Mae and any such action will be at the discretion and expense of the servicer.

The servicer should consult its foreclosure attorney to determine if any other legal requirements apply when conducting foreclosures of mortgage loans in which MERS is the prior mortgagee of record.?

A servicer, in this case, Fannie Mae, isn't a "real party of interest" and doesn't have the right to issue the assignments. If the homeowner were to attack the assignment, the entire foreclosure could be "derailed."

If you would like more information on foreclosures, please check out our articles The Three Stages Of Foreclosure In Alabama and Wrongful Foreclosures In Alabama.

If you have further questions or concerns, feel free to contact us through our website or by calling 205-879-2447.

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Full post as published by Alabama Consumer Blog on April 16, 2010 (boomark / email).