Fannie Mae released Lender Letter 02-05 on October 14th.  The letter provides guidance on hurricane-related servicing and underwriting policies.  The following is a list of highlights of the release:

* Fannie Mae has provided each servicer with a list of loans in the FEMA declared areas that must be inspected.  The list excludes FEMA declared areas that were not directly hit by the hurricances.

* Fannie Mae will reimburse up to $30 for inspections completed on the provided list of loans.  Property inspections are not required if the servicer has had contact with the borrower and the borrower reports no damages.  Servicers are not required to inspect current loans outside of the damaged areas.

* Fannie Mae has streamlined its invoicing procedure for the required FEMA inspections.   They will reimburse invoices of 25 or more property inspections at once, instead of individual property invoices.

* Disposition of Insurance Proceeds - servicers may be required to get approval for the disposition of insurance proceeds to borrower.  Servicers will be required to complete Fannie Mae form 176 for all properties where hazard insurance claims have been filed.

* Lenient underwriting policies for new loan originations for borrowers that have lost their homes in the hurricanes.  Fannie Mae has also created new forms to be completed by the mortgagor to support their claim of loss as a result of the hurricanes.

* Refined Property Appraisal procedures in the hurricane affected areas.

* Frequently Asked Questions and Answers for servicers' easy reference.

For the complete letter and forms, please click the following link:

Fannie Mae Lender Letter 02-05