Fannie Mae To Impose Fines On Loan Servicers Who Delay Foreclosure Proceedings

A large number of Americans who have fallen behind on their mortgage payments have tried to stave off foreclosure by submitting applications for loan modifications or refinancing. But Fannie Mae has recently announced that it will impose hefty fines on loan servicers who do not complete foreclosure proceedings in an outlined timeline.

According to the government-backed mortgage guarantor, "compensatory fees" will be assigned to companies if they cannot explain why they delayed in foreclosing on the property of a delinquent homeowner who is ineligible for a modification or short sale. Each state carries different timelines in which foreclosure proceedings must be completed. In some states, foreclosures must be completed within a 60-day period from the date of delinquency.

Fannie has said that will "not impose compensatory fees for delays beyond the control of the servicer, such as unavoidable mediation or court delays, or sales delays by sheriffs or other selling officers."

Although Fannie Mae will not impose fees upon loan servicers until it has been determined that a homeowner has exhausted all debt relief options, consumers fear that the new rules will put pressure on companies to foreclosure more quickly.