D2-2-10: Requirements for Performing Property Inspections (11/14/2018)

© Fannie Mae Single Family Servicing Guide

Introduction

This topic contains the following:

• Inspecting a Property Securing a Delinquent Mortgage Loan
• Inspecting and Repairing a Property in Disrepair
• Inspecting and Protecting a Vacant or Abandoned Property

Inspecting a Property Securing a Delinquent Mortgage Loan

The servicer must order the initial property inspection on or after the 60th day of delinquency and complete the property inspection no later than the 75th day of delinquency for all delinquent mortgage loans. The following table outlines the servicer’s responsibilities for initiating and continuing property inspections on a property securing a delinquent mortgage loan.

If the servicer has not established QRPC while the mortgage loan remains delinquent, the servicer must continue attempts to achieve QRPC with the borrower, as described in D2-2-01, Achieving Quality Right Party Contact with a Borrower (11/14/2018). The servicer of a first lien mortgage loan must continue property inspections every calendar month until the foreclosure sale, the execution of a Mortgage Release, or the mortgage loan becomes current.

Note: Fannie Mae will reimburse the servicer for all property inspections when the mortgage loan is delinquent.

The servicer must use a Property Inspection Report (Form 30) or its own form that provides equivalent information to document the property inspection. When a property inspection is required every calendar month, the property inspections must occur between 20 and 35 days apart. However, the servicer must complete more frequent property inspections when necessary (for example, when required by local ordinance, in high vandal areas, based on property condition, or during winter months).

The following table outlines the type of inspection the servicer must perform depending on the occupancy status.

The servicer must maintain and make any checklists or other documentation relied upon to determine the occupancy status of a property available to Fannie Mae upon request. Fannie Mae reserves the right to require

• revisions to the checklists,
• the use of a prescribed form of checklist, or
• affidavits of vacancy where necessary or appropriate to evidence the vacancy status.

See A4-2.1-02, Property Inspection Vendor Management and Oversight (11/12/2014) for information on property inspection vendor management.

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) for requesting reimbursement of property inspection fees.

The servicer of a second lien mortgage loan must take the actions listed in the following table.

Inspecting and Repairing a Property in Disrepair

The servicer of a first lien mortgage loan must inspect the property immediately if it has information that the value of a property may be in jeopardy because of its condition (For disaster-impacted properties, see D1-3-01, Evaluating the Impact of a Disaster Event and Assisting a Borrower (08/15/2018)). When the servicer learns of any condition detrimental to the value of the property or the need for urgent repairs, the servicer must remind the borrower of his or her obligation to maintain the property and take the action described in the following table depending on the borrower’s action.

Before the servicer of a second lien mortgage loan conducts a property inspection, it must contact the first lien mortgage loan servicer to determine when the property was last inspected to avoid a potential duplication of effort. If the servicer conducts a property inspection, it must notify the first lien mortgage loan servicer of the results of the property inspection and the borrower’s plans regarding any needed repairs. The following table describes the action that the servicer of a second lien mortgage loan must take depending on the borrower’s action.

The servicer must follow the procedures in General Expense Reimbursement Requirements in F-1-05, Expense Reimbursement (08/15/2018) for advancing funds to make repairs and requesting reimbursement.

Inspecting and Protecting a Vacant or Abandoned Property

The servicer must inspect a property as soon as possible after it becomes aware of the possibility that the property may be vacant or abandoned.

When the property inspection confirms that the property is vacant, the servicer must take the actions listed in the following table.

The following table describes the servicer’s next steps depending on the mortgage loan status if the property inspection confirms that the property is vacant.

The servicer must obtain a signed copy of the inspection report that first reported the vacancy, in which the person who completed the inspection certifies that he or she personally went to the property location and that the property is vacant.

An electronic signature is acceptable when obtaining a signed copy of the inspection report. See Selling Guide A2-5.1-03, Electronic Records, Signatures, and Transactions for additional information.

If a property is subsequently inspected and remains vacant, the continued vacancy status must be documented on the checklist or other document evidencing notes of the inspection, but no additional signature is required. If a property previously reported to be vacant becomes occupied, a new signed inspection report is required if the property becomes vacant.

Once the servicer has confirmed the property is abandoned, the servicer must complete an interior inspection every calendar month until the foreclosure sale date. Interior inspections may be conducted simultaneously with other required property inspections.