Fannie Mae has released Announcement  05-06 describing changes to their natural disaster relief procedures, primarily for disbursing insurance claim proceeds.

These changes will streamline the procedures for handling insurance proceeds to provide servicers with more discretion in managing their process for the disposition of hazard (and,if applicable, flood or earthquake) insurance proceeds. 

The procedures have four categories that:

1. provide servicers with more discretion to disburse funds when properties securing current mortgages have not suffered a total or near-total loss (servicers, therefore, may choose to disburse all proceeds for the repairs and restoration in a single payment, regardless of the amount, or in a series of progress payments as work is completed);
2. increase the maximum amounts that servicers can disburse when properties securing delinquent mortgages have not suffered a total or near-total loss;
3. provide an electronic process for servicers to make recommendations for the disposition of the insurance proceeds for mortgages 90 days or more delinquent and for mortgages in foreclosure;
4. address options for the disposition of insurance proceeds for mortgages that are current or 30 to 90 days delinquent based upon borrowers’ willingness to repair their properties.

Some points of interest include

• Servicers will now be required to temporarily discontinue reporting delinquencies to credit bureaus if they are aware that the borrower's delinquency is attributable to hardships the borrower has incurred as the result of a natural disaster.

• Servicers are reminded that they must ensure that hazard (and, if applicable, flood or earthquake) insurance claims are filed. If the servicer becomes aware of a loss and the borrower has not filed a proof of loss, the servicer must take appropriate action to ensure that the proof of loss is filed within the time period specified in the insurance policy.

To view the full document please click on the following link;

Fannie Mae Announcement 05-06

In addition, Safeguard has received verification that Fannie Mae no longer requires the utilization of Form 30. Servicers are required to receive inspection results that mirror those on Form 30.

Until full automation is acheived Hazard Claim 176 is still required.

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