Please see the following Frequently Asked Questions Reporting Process from the FNMA website.

Please note the highlighted in reference to pre-foreclosure property inspections.

What is Fannie Mae's policy on Mortgage Reinstatements?

Answer: Fannie Mae has become aware that some servicers have been including a "reinstatement" fee in the amount that a delinquent borrower must pay to bring his or her mortgage current. This fee is then used to offset the servicer's overhead expenses or, if an attorney (or trustee) prepared the required "breach" letter or took other actions on the servicer's behalf, to pay the attorney (or trustee) for services rendered. Servicers that are billing borrowers for such "reinstatement" fees should cease doing so immediately.

Part IV, Section 203, of the Servicing Guide permits servicers to use an attorney to collect multiple delinquent payments from a borrower who has a history of delinquencies and to charge the related attorney fee to the borrower, unless local law or the mortgage insurer or guarantor prohibits that practice. (FHA and VA specifically prohibit charging borrowers for such fees if foreclosure proceedings have not been initiated.) Fannie Mae's intent in allowing servicers to charge borrowers for attorney fees in this specific situation was to provide additional leverage for them to use with borrowers who are chronic delinquents, not to provide a blanket authorization for the routine charging of such fees when attorneys or outsourcing firms are used to perform what are essentially servicing-related functions. Therefore, we are amending this Section, effective immediately, to permit servicers to use attorneys in such cases only if they are willing to absorb the costs of doing so themselves. Borrowers may not be billed for attorney fees in this or similar instances, nor will Fannie Mae reimburse servicers for such fees.

A borrower who fully reinstates a mortgage before it is referred to an attorney for foreclosure action is expected to pay only the following in connection with the reinstatement -- all past due installments (principal, interest, and any applicable escrow deposits), late charges on the delinquent payments, repayment of any advances (for taxes, insurance premiums, protection of the security, etc.) the servicer made on his or her behalf, and the costs of performing any required pre-foreclosure property inspections (if applicable and permissible under the terms of the mortgage instrument). After the case has been referred to an attorney (or trustee) for the initiation of foreclosure proceedings (or to handle bankruptcy proceedings), the borrower will also be expected to pay any legal costs and expenses that were actually incurred in connection with the foreclosure (or bankruptcy) proceedings (including attorney or trustee fees).

For additional review of FNMA Frequently Asked Questions, please click to visit the FNMA web site.