Servicing Guide

Published November 10, 2020

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What actions must be taken if Fannie Mae approves the substitution of property securing a mortgage loan?

If Fannie Mae approves the substitution of property securing a mortgage loan, the servicer must take the actions described in the following table.

If Fannie Mae agrees to the substitution of property securing a mortgage loan, the servicer must...
 

Advise the borrower that he or she

  • is solely responsible for financing the costs of the relocation of the dwelling, or demolition of the dwelling and reconstruction of a replacement dwelling, unless Fannie Mae agrees to absorb some of the costs;

  • bears all risks of damage to the house or failure to complete the move; and

  • must obtain flood insurance coverage, if the new lot or location is in a Special Flood Hazard Area for which Fannie Mae requires flood insurance. See Chapter B-3, Flood Insurance Requirements for Fannie Mae’s flood insurance requirements.

 

Verify that all building code and zoning requirements are met in connection with the relocation of the existing dwelling or demolition and reconstruction of a replacement dwelling.

 

Ensure that Fannie Mae’s mortgage lien

  • remains a good and valid lien of the same priority during and after the move to a new lot,

  • is extended to cover the new lot before the move and is a good and valid lien of the same priority on the new lot, and

  • is released from the old lot after the move.

 

Confirm completion of the planned relocation of the improvements to the new location or demolition and reconstruction of the dwelling.

See below for related Q&A:

How should a request for the substitution of property be evaluated?

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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If you have additional questions, Fannie Mae customers can visit Ask Poli to get information from other Fannie Mae published sources.

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