source:
  type: guide
  id: fnma-svc-e-3.4-01
  authority: Fannie Mae Servicing Guide E-3.4-01 — Suspending Foreclosure Proceedings
    for Workout Negotiations
  description: Fannie Mae Servicing Guide E-3.4-01 — Suspending Foreclosure Proceedings
    for Workout Negotiations.
  coverage_tier: operative
obligations:
- id: fnma-svc-e-3.4-01-full
  canonical_id: fnma-svc-e-3.4-01-full
  section: Fannie Mae Servicing Guide E-3.4-01 — Suspending Foreclosure Proceedings
    for Workout Negotiations
  type: do
  tags:
  - regulator-direct
  - fnma
  - servicing-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Servicing Guide E-3.4-01 — Suspending Foreclosure Proceedings
      for Workout Negotiations
    source_class: fnma-guide
    source_url: https://singlefamily.fanniemae.com/media/document/pdf/servicing-guide
    snapshot_id: cf63a82bbb4adfba
    fetched_at: '2026-05-22T23:53:19Z'
    content_hash: sha256:89df66c43baad07f8a8dd9d224492fff7d15e8839edba02ad0e74c7e50fe5da3
    paragraph_quote: 'E-3.4-01, Suspending Foreclosure Proceedings for Workout Negotiations
      (07/14/2021) Introduction This topic contains the following: Overview General
      Requirements for Suspending Foreclosure Proceedings Handling a Complete BRP
      Received After Foreclosure Referral But More Than 37 Days Prior to the Foreclosure
      Sale Date for a Principal Residence Handling a Complete BRP Received After Foreclosure
      Referral But More Than 37 Days Prior to the Foreclosure Sale Date for Other
      Mortgage Loans Handling a Complete BRP Received After Foreclosure Referral But
      Within 15 to 37 Days Prior to the Foreclosure Sale Date Handling a Complete
      BRP Received Less Than 15 Days Prior to the Foreclosure Sale Date Overview When
      a delinquent mortgage loan is referred to a law ﬁrm, the servicer must continue
      to work with the borrower to bring the mortgage loan current or ﬁnalize a workout
      arrangement up to the date of the foreclosure sale, unless the servicer has
      determined that all workout options are not feasible as discussed in D2-3, Fannie
      Mae’s Home Retention and Liquidation Workout Options. When a delinquent mortgage
      loan is referred to a law ﬁrm, the servicer must NOT suspend foreclosure proceedings
      pending Fannie Mae''s approval of additional attorney fees. General Requirements
      for Suspending Foreclosure Proceedings If a mortgage loan has been referred
      to foreclosure prior to receipt of a complete BRP, the servicer may delay the
      foreclosure process without requesting Fannie Mae’s prior written approval pursuant
      to the terms and conditions set forth below: Published May 13, 2026 470 the
      BRP must be complete before any legal action may be postponed, except if an
      oﬀer for a short sale has been made based upon the servicer’s evaluation of
      the borrower for a short sale without receiving a complete BRP in accordance
      with Evaluating a Borrower to Determine Eligibility for a Fannie Mae Short Sale
      in D2-3.3-01, Fannie Mae Short Sale; or a solicitation for a Fannie Mae Flex
      Modiﬁcation has been made and the borrower contacts the servicer within 14 days
      of the date of the oﬀer to indicate an intent to accept the oﬀer (see Soliciting
      the Borrower for a Fannie Mae Flex Modiﬁcation in D2-3.2-06, Fannie Mae Flex
      Modiﬁcation). In such event, the servicer must delay the next legal action in
      the foreclosure proceeding until the last day of the month in which the ﬁrst
      payment is due. If the borrower’s payment is not received by such date, the
      servicer must proceed with the foreclosure process; in cases where a payment
      is required under the terms of a retention oﬀer including a Trial Period Plan
      based on a complete BRP, and the borrower indicates acceptance of the oﬀer (either
      verbally or in writing), the servicer must delay the next legal action in the
      foreclosure proceeding until the borrower fails to make the ﬁrst payment under
      the terms of the proposed workout. Verbal or written acceptance, without payment
      or execution of required documents, serves only to postpone the foreclosure
      process. A workout plan may not be consummated without an Evaluation Notice
      as required by the particular workout plan; if the servicer receives the ﬁrst
      payment in a timely manner in accordance with the terms of a Trial Period Plan,
      repayment plan, or forbearance plan, the servicer must delay the next legal
      action until the borrower breaches the plan; fourteen-day delay periods may
      be extended in order to postpone or repeat the next legal action or postpone
      a foreclosure sale if necessary under state or local law; if Fannie Mae approves
      a short sale purchase oﬀer, the servicer must suspend the foreclosure sale to
      allow the short sale to close as permitted under state or local law; and if
      a notice of trustee/sheriﬀ sale has been recorded and the servicer is notiﬁed
      of borrower approval by the mortgage assistance fund program provider and the
      servicer believes the funds will reinstate the mortgage loan, the servicer is
      authorized to postpone the foreclosure proceedings. However, if a foreclosure
      sale is scheduled less than seven days from the date the servicer is notiﬁed
      of borrower approval by the mortgage assistance fund program provider, the servicer
      must not notify the attorney to “place on hold” or suspend the foreclosure proceedings.
      See D2-3.1-05, Interacting with Mortgage Assistance Fund Program Providers for
      additional information. When the servicer receives a complete BRP, it must delay
      the next legal action in the foreclosure process as required by these provisions
      as long as delays are permitted under applicable law. The next legal action
      will be the next step required by law to proceed with the foreclosure action,
      such as publication or service of process, but does not include administrative
      actions, such as title searches or document preparation. In some states, the
      judge may dismiss the case for “lack of prosecution” if the workout plan is
      not ﬁled with the court as part of the foreclosure proceedings. If this happens
      and the borrower subsequently defaults under the executed workout plan, the
      foreclosure proceedings will have to be restarted, which will result in extra
      foreclosure fees and expenses. In such cases, Fannie Mae will not reimburse
      the servicer for the resulting additional fees and expenses. The servicer is
      not in violation of these requirements to the extent that a court or public
      oﬃcial fails or refuses to halt some or all activities in the matter after the
      servicer has made reasonable eﬀorts to move the court or request the public
      oﬃcial for a cessation of the activity or event. Published May 13, 2026 471
      In applicable foreclosure actions where there is no foreclosure sale and title
      is transferred by court order, where possible and subject to applicable law,
      the servicer must use the estimated court order docket date, if known, in place
      of the foreclosure sale date in this topic’s requirements. The limitations described
      in the remainder of this section apply only to suspensions initiated by the
      servicer without Fannie Mae''s approval and do not apply to suspensions otherwise
      required by Fannie Mae. Handling a Complete BRP Received After Foreclosure Referral
      But More Than 37 Days Prior to the Foreclosure Sale Date for a Principal Residence
      The following table contains Fannie Mae’s requirements for suspending foreclosure
      proceedings on all mortgage loans secured by a principal residence when the
      servicer receives a complete BRP. These requirements do not apply if the borrower
      previously submitted a complete BRP and the mortgage loan has been delinquent
      at all times since the borrower submitted the prior complete BRP, as authorized
      by applicable law. If... Then the servicer must... the borrower’s complete BRP
      is received after referral to foreclosure and more than 37 days prior to the
      foreclosure sale date delay ﬁling the Motion for Foreclosure Judgment or Order
      of Sale. the Motion for Foreclosure Judgment or Order of Sale has already been
      ﬁled request the court to delay a hearing or ruling as permitted under state
      or local law, unless • the servicer has reviewed a complete BRP and delivered
      an Evaluation Notice to the borrower stating that the borrower is ineligible
      for a workout option and, if applicable, the borrower has not requested an appeal
      or the borrower’s appeal has been denied in accordance with D2-2-07, Resolving
      an Appeal of a Mortgage Loan Modiﬁcation Trial Period Plan Denial for a Principal
      Residence; • the borrower rejects all workout options oﬀered by the servicer;
      or • the borrower fails to perform under an agreement on any workout option.
      an Evaluation Notice for a retention oﬀer has been sent to the borrower in connection
      with the borrower’s complete BRP • in a judicial jurisdiction, continue to delay
      the Motion for Judgment (or equivalent action) for up to 14 days to permit the
      borrower to respond; or • in a non-judicial jurisdiction, delay the next legal
      action for up to 14 days to permit the borrower to respond. Published May 13,
      2026 472 Additional guidance related speciﬁcally to short sale and Mortgage
      Release transactions is provided below. Complete Borrower Response Package Submitted
      Without a Short Sale Oﬀer The servicer must meet the requirements shown in the
      following table upon receipt of complete BRP without a short sale oﬀer for a
      principal residence more than 37 days prior to the foreclosure sale date, when
      either the borrower indicates in the complete BRP that they desire a liquidation
      workout option, or the servicer will not be oﬀering a mortgage loan modiﬁcation
      to the borrower. These requirements do not apply if the borrower previously
      submitted a complete BRP and the mortgage loan has been delinquent at all times
      since the borrower submitted the prior complete BRP, as authorized by applicable
      law. ✓ The servicer must… Send the borrower an Evaluation Notice within 5 days
      of an evaluation decision but no more than 30 days from the receipt of a complete
      BRP. Require the borrower to • respond to the servicer decision within 14 days
      of the date of the Evaluation Notice by either ⚬ appealing the denial of any
      mortgage loan modiﬁcation Trial Period Plan, if applicable; or ⚬ indicating
      the intent to accept the oﬀer to pursue a short sale, if the Evaluation Notice
      includes the servicer’s approval to pursue a short sale. • submit a short sale
      oﬀer within 45 days of the date of the Evaluation Notice or within 45 days of
      the servicer’s appeal decision, if applicable. Review a short sale oﬀer within
      15 days from the date it is received if the borrower submits the oﬀer within
      45 days of the Evaluation Notice. Delay referral to foreclosure or the next
      legal action in the foreclosure process during the • servicer evaluation of
      the complete BRP; • 14-day borrower response period; • appeals process, if applicable;
      • 45-day period the borrower is required to submit a short sale oﬀer to the
      servicer; • 15-day period the servicer is reviewing a short sale oﬀer submitted
      within 45 days of the date of the Evaluation Notice; and • 60-day period following
      approval of the short sale oﬀer to facilitate the closing of an approved short
      sale. Published May 13, 2026 473 ✓ The servicer must… Proceed with the next
      legal action in the foreclosure process if • Fannie Mae rejects the short sale
      oﬀer, or • the borrower does not respond or comply with all requirements of
      the short sale. Complete Borrower Response Package Submitted With a Short Sale
      Oﬀer The following table reﬂects requirements the servicer must meet when a
      complete BRP for a principal residence that includes a short sale oﬀer is received
      more than 37 days prior to the foreclosure sale date. These requirements do
      not apply if the borrower previously submitted a complete BRP and the mortgage
      loan has been delinquent at all times since the borrower submitted the prior
      complete BRP, as authorized by applicable law. ✓ The servicer must… Send the
      borrower an Evaluation Notice within 5 days of an evaluation decision but no
      more than 30 days from the receipt of a complete BRP submitted with a short
      sale oﬀer. Require the borrower to respond to the servicer decision within 14
      days of the date of the Evaluation Notice or, if applicable, appeal the denial
      of any mortgage loan modiﬁcation Trial Period Plan. Note: The servicer must
      not require the borrower to respond to a short sale counteroﬀer prior to the
      end of the time frame for the borrower’s response to the Evaluation Notice.
      Speciﬁcally, the servicer must request a counteroﬀer response from the borrower
      by the later of either • ﬁve business days for the servicer’s or Fannie Mae’s
      short sale counteroﬀer, or • the date by which the borrower’s response to the
      Evaluation Notice is due in cases where the servicer is providing an Evaluation
      Notice in response to a complete BRP. Delay referral to foreclosure or the next
      legal action in the foreclosure process during the • servicer evaluation of
      the complete BRP and short sale oﬀer; • 14-day borrower response period; • appeals
      process, if applicable; and • 60-day period following approval of the short
      sale oﬀer to facilitate the closing of an approved short sale. Proceed with
      the next legal action in the foreclosure process if • Fannie Mae rejects the
      short sale oﬀer, or • the borrower does not respond or comply with all requirements
      of the short sale. Mortgage Release Published May 13, 2026 474 The servicer
      must meet the requirements shown in the following table when a complete BRP
      for a principal residence is received more than 37 days prior to the foreclosure
      sale date and either the borrower indicates in the complete BRP that they desire
      a liquidation workout option, or the servicer will not be oﬀering a mortgage
      loan modiﬁcation to the borrower. These requirements do not apply if the borrower
      previously submitted a complete BRP and the mortgage loan has been delinquent
      at all times since the borrower submitted the prior complete BRP, as authorized
      by applicable law. If the borrower… Then the servicer… was not previously approved
      to pursue a short sale • must send the borrower an Evaluation Notice within
      5 days of an evaluation decision but no more than 30 days from the receipt of
      a complete BRP. • must require the borrower to respond to the servicer decision
      within 14 days of the date of the Mortgage Release oﬀer in the Evaluation Notice
      by either ⚬ accepting the oﬀer to pursue a Mortgage Release oﬀer, or ⚬ appealing
      the denial of any mortgage loan modiﬁcation Trial Period Plan, if applicable.
      • must delay the next legal action or referral to foreclosure during the ⚬ servicer
      evaluation of the complete BRP; ⚬ 14-day borrower response period; ⚬ appeals
      process, if applicable; and ⚬ 60 days following the date of the borrower’s acceptance
      in order to complete the Mortgage Release transaction. • must proceed with the
      next legal action in the foreclosure process at the end of the 60-day period,
      but is permitted to use an additional 30 days to complete the Mortgage Release
      transaction if it cannot be completed within 60 days. was previously approved
      to pursue a short sale and accepts a Mortgage Release oﬀer must not delay the
      next legal action in the foreclosure process and adhere to Fannie Mae’s foreclosure
      postponement requirements. Handling a Complete BRP Received After Foreclosure
      Referral But More Than 37 Published May 13, 2026 475 Days Prior to the Foreclosure
      Sale Date for Other Mortgage Loans The following table contains Fannie Mae’s
      requirements for suspending foreclosure proceedings on all other mortgage loans
      when a complete BRP is received after foreclosure referral but more than 37
      days prior to the foreclosure sale date. Complete BRP received after foreclosure
      referral but more than 37 days prior to the foreclosure sale date Stage of Evaluation
      Requirements A complete BRP has been received and is being evaluated No delay
      in legal action is required. A complete BRP and a short sale oﬀer have been
      received The servicer must attempt to conduct a review of the complete BRP and
      short sale oﬀer in accordance with Fannie Mae’s required timelines. See D2-2-05,
      Receiving a Borrower Response Package containing standard review timelines.
      If the servicer cannot do so, it must conduct an expedited review of the complete
      BRP and short sale oﬀer prior to the foreclosure certiﬁcation date. An Evaluation
      Notice was sent to the borrower and a retention oﬀer has been extended No delay
      in legal action is required unless the foreclosure sale is within the borrower''s
      14-day response period. In those instances, the servicer must delay the foreclosure
      sale for up to 14 days to allow the borrower to respond. Handling a Complete
      BRP Received After Foreclosure Referral But Within 15 to 37 Days Prior to the
      Foreclosure Sale Date The following table provides Fannie Mae requirements for
      suspending foreclosure proceedings for all mortgage loans when the complete
      BRP is received after foreclosure referral but within 15 to 37 days prior to
      the foreclosure sale date. Published May 13, 2026 476 Complete BRP received
      after foreclosure referral but within 15 to 37 days prior to the foreclosure
      sale date Stage of Evaluation Requirements The complete BRP has been received
      and is being evaluated No delay in legal action is required. The servicer must
      conduct an expedited review of the complete BRP (and short sale purchase oﬀer,
      if applicable) prior to the foreclosure certiﬁcation date. An Evaluation Notice
      was sent to borrower and a retention oﬀer has been extended No delay in legal
      action is required unless a retention oﬀer is made and the foreclosure sale
      is within the borrower''s 14-day response period. In those instances, the servicer
      must delay the foreclosure sale for up to 14 days to allow the borrower to respond.
      Note: The servicer must not oﬀer a Mortgage Release option during this time
      period. Handling a Complete BRP Received Less Than 15 Days Prior to the Foreclosure
      Sale Date The following table provides Fannie Mae requirements for suspending
      foreclosure proceedings for all mortgage loans when the complete BRP is received
      less than 15 days prior to the foreclosure sale date. Complete BRP received
      less than 15 Days prior to the foreclosure sale date Stage of Evaluation Requirements
      The complete BRP has been received and is being evaluated No delay in legal
      action is required. The servicer is encouraged, but not required, to conduct
      an expedited review of the complete BRP (and short sale purchase oﬀer, if applicable).
      A Notiﬁcation and Evaluation Notice was sent to the borrower and a retention
      oﬀer has been extended The servicer must delay the foreclosure sale for up to
      14 days to allow the borrower to respond. Published May 13, 2026 477 Complete
      BRP received less than 15 Days prior to the foreclosure sale date Stage of Evaluation
      Requirements Fannie Mae has approved a short sale purchase oﬀer The servicer
      must suspend the foreclosure sale to allow the short sale to close as permitted
      under state or local law. If the servicer completed its review of the complete
      BRP, it must notify the borrower prior to the foreclosure sale as to the results
      of the review. If the servicer did not complete its review of the complete BRP,
      it must advise the borrower of its inability to review the package prior to
      the sale. Note: The servicer must not oﬀer a Mortgage Release option during
      this time period. Recent Related Announcements The table below provides references
      to recently issued Announcements that are related to this topic. Announcements
      Issue Date Announcement-SVC-2021-04 July 14, 2021 Announcement SVC-2019-02 April
      10, 2019'
  judgment: false
