Foreclosures are taking more time and cost more to complete, so Fannie Mae raised limits on how much its mortgage servicers pay foreclosure attorneys and trustees in 38 states.

The raises went into effect for any mortgages referred to an attorney on or after June 1, according to an alert from the government-sponsored enterprise. Servicers make these payments, and Fannie reimburses the amount.

Fannie increased the limits by an average of a few hundred dollars per mortgage. The largest increase, though was in New Jersey, where Fannie increased permissible fees to $2,425 from $1,300 per loan.

The highest potential fee an foreclosure attorney can get is in Hawaii, where the state changed the foreclosure process last year. A new law allows borrowers to contest filings in court. Fannie only recently allowed the process to restart on the loans it owns there, and raised the fee attorneys can get to $2,400 from $2,000 before June.

In cases where a borrower contests the filing, attorneys in Hawaii can get up to $3,400 in fees.

“Fannie Mae regularly reviews changes to state foreclosure processes and monitors the work required of foreclosure counsel and trustees to determine if adjustments to our allowable foreclosure fee guidelines should be made,” a Fannie Mae spokesman said in a statement. “This week’s announcement reflects the results of our most recent reviews.”

Fees remained the same in two hard hit states Arizona and California.

The time it takes to complete a foreclosure remains elevated. The national average reached 378 days for filings completed in the second quarter, according to RealtyTrac. But it varies in some states. A foreclosure averages more than 1,000 days in New York.

Many states put in reforms to protect borrowers from abusive practices and to ensure servicers follow existing state law when it comes to documentation and procedure. The largest servicers settled with the state attorneys general for $25 billion over problems in the past.

But an extended process means more cost to Fannie and Freddie Mac, which have taken $189 billion in bailouts since entering conservatorship in 2008.

New state laws could extend the process in other states such as California, which has one of the fastest timelines in the country. The state legislature recently approved new standards to protect against duel tracking, robo-signing and other problems.


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