Fannie Bars Foreclosure Actions in the Name of MERS

In new policy guidelines released this week, Fannie Mae told servicers that they can no longer name MERS as the plaintiff in any foreclosure action, whether judicial or non-judicial, on a mortgage loan owned or securitized by the GSE.



https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2010/svc1005.pdf


Fannie Mae stated in its new servicing guidelines that when MERS is listed as the mortgagee of record, the servicer must prepare a mortgage assignment transferring the position from MERS back to the servicer, and then bring the foreclosure in its own name.


In the event that the GSE requires the foreclosure be brought in the name of Fannie Mae, the servicer must conduct that transfer assignment as well. In all cases, the assignment from MERS to the servicer or Fannie Mae must be recorded before the foreclosure begins.

“Fannie Mae will not reimburse the servicer for any expense incurred in preparing or recording an assignment of the mortgage loan from MERS to the servicer or to Fannie Mae,” the guidelines read.

Since 2006, Fannie Mae has required servicers to file foreclosure actions in their own name in judicial states where proceedings take place in the courtroom, such as Florida, Illinois, and New York.

Beginning May 1, 2010, Fannie is adding that same stipulation to foreclosure petitions in non-judicial states, such as California, Massachusetts, and Texas, which allow lenders to foreclose without involving the courts.