Servicing Guide

Published September 9, 2020

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What conditions must be met in order to approve a partition of real property?

The servicer must evaluate requests to partition real property based on the specific circumstance of the request, as described in the following table.

Conditions required to approve a partition of real property
 

The mortgage loan must be current.

  The mortgage loan must have been originated greater than 12 months prior to the date of the request.
 

The mortgage loan must not have been

  • greater than 30 days past due more than once in the most recent 12-month period, or

  • otherwise in default under the terms of the mortgage loan over the most recent 12-month period.

 

The priority of Fannie Mae’s mortgage lien must not be impacted.

 

The partition of the property satisfies the subdivision laws of the county or jurisdiction, if applicable, and complies with all zoning requirements or codes.

  The primary dwelling must be located within the boundaries of a single parcel to be retained as encumbered under Fannie Mae’s mortgage lien.

The servicer must evaluate requests to partition real property based on the specific circumstance of the request, as described in the following table.

If the partition of real property... Then the servicer...
meets all of the conditions and the LTV based on the estimated property value after the partition is less than 60% is authorized to approve the partition on Fannie Mae’s behalf.
meets all of the conditions and the LTV based on the estimated property value after the partition is greater than or equal to 60% is authorized to approve the partition on Fannie Mae’s behalf if the borrower agrees to reduce the mortgage loan balance by an amount sufficient to maintain the LTV ratio immediately prior to the partition.

If the request for the partition of real property includes a request to release a borrower from liability under the mortgage loan, the servicer is authorized to approve the request if the borrower who retains possession of the property securing a mortgage loan has the financial ability to make the mortgage loan payments. To evaluate a borrower’s financial ability to make the mortgage payments the servicer should follow the procedures in F-1-29, Reviewing a Transfer of Ownership for Credit and Financial Capacity.

See below for related Q&A's: 

How should a request for the partition of real property be evaluated? 

Can a request to partition real property be approved if all conditions are not met? 

For more information please see: D1-1-01, Evaluating a Request for the Release, or Partial Release, of Property Securing a Mortgage Loan.

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