D1-3-01: Evaluating the Impact of a Disaster Event and Assisting a Borrower (08/15/2018)

© Fannie Mae Single Family Servicing Guide

Introduction

This topic contains the following:

• Evaluating the Extent and Nature of the Property Damage
• Servicer’s Responsibilities When a Borrower Is Affected by a Disaster Event
• Initiating or Suspending Legal Proceedings

Evaluating the Extent and Nature of the Property Damage

Disasters are earthquakes, floods, hurricanes, or other catastrophes caused by either nature or a person or event beyond the borrower's control resulting in devastation in terms of property damage and destruction.

When a disaster event occurs, the servicer must determine the extent and nature of any damage to a property securing a mortgage loan by attempting to contact the borrower. When a regional disaster event occurs, the servicer must determine the extent of the damage to any property securing a mortgage loan in the disaster area (regardless of whether the property is in a FEMA-Declared Disaster Area eligible for Individual Assistance) through reasonable means, including but not limited to:

• obtaining information from the borrower;
• using predictive modeling data or alternative technology, such as aerial photography, to estimate the likelihood of damage in a particulr area or to a particular property; or
• performing a property inspection when necessary.

When inspecting impacted properties, the servicer must utilize the Property Inspection Report (Form 30) or equivalent. The servicer must exercise discretion in determining whether an interior or exterior property inspection is appropriate depending on the individual circumstances. The servicer is authorized to request reimbursement for disaster inspection costs incurred on current and delinquent mortgage loans when a property inspection is necessary. To request reimbursement, the servicer must follow the procedures in Requesting Reimbursement for Property Inspections and Property Preservation Expenses in F-1-05, Expense Reimbursement (08/15/2018).

The following table describes the servicer’s requirements when it becomes aware that a property securing a mortgage loan has incurred damage as a result of a disaster event.

See D2-2-10, Requirements for Performing Property Inspections (11/14/2018) and the Property Preservation Matrix and Reference Guide for additional information on property inspections and property preservation.

Servicer’s Responsibilities When a Borrower Is Affected by a Disaster Event

The following table describes the servicer's requirements when a borrower is affected by a disaster event.

Initiating or Suspending Legal Proceedings

If the servicer has any doubt about the effect of the disaster event on the condition of a property or the borrower's employment or income status, it must suspend any legal proceedings, including foreclosure proceedings, already in process until it can determine the accurate status, and make its final decision on the appropriate course of action based upon its findings. The servicer must contact its Fannie Mae Servicing Representative (see F-4-03, List of Contacts (09/18/2018)) to obtain written approval before granting a suspension that exceeds 90 days.

The servicer must not initiate or complete foreclosure proceedings related to a property that has been destroyed until it eval- uates the economic feasibility of pursuing the foreclosure.