Servicing Guide

Published September 9, 2020

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What conditions must be met in order to approve a request to add land to the property securing the mortgage loan?

The servicer must determine whether the request to add the land to the real property securing the mortgage loan meets the conditions in the following table.

Conditions required to approve an addition of land
 

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 additional land parcel must be conveyed in its entirety and must have the same basic zoning requirements as the existing property (e.g., residential, agricultural).

 

The entire property may contain only one dwelling unit. Limited additional non-residential structures located on the additional land are acceptable.

 

The additional land must not contain any hazardous materials, dilapidated, or unsafe structures or other issues that may adversely affect the value or marketability of the combined property.

 

Any structures present on the additional land must be compliant with local building codes.

 

The additional land parcel and the existing property securing a mortgage loan must be adjoined. Parcels that otherwise would be adjoined, but are divided by a road, are acceptable if the parcel without a residence is a non-buildable lot (e.g., waterfront properties where the parcel without the dwelling provides access to the water but may not be built upon due to local building codes).

 

The LTV of the property securing a mortgage loan after the release must not be higher than the LTV ratio of the mortgage loan immediately prior to the release.

The servicer must evaluate requests to add land to the real property securing the mortgage loan based on the specific circumstances of the request, as described in the following table.

If the addition of land... Then the servicer...

meets all of the conditions and the LTV based on the estimated property value after the release is less than 60%

is authorized to approve the release of real property on Fannie Mae’s behalf.

meets all of the conditions and the LTV based on the estimated property value after the release is greater than or equal to 60%

is authorized to approve the lease 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 addition of land.

If the request to add a portion of the real property securing the mortgage loan includes a concurrent request to release land, the requirements for each request type must be met.

See below for related Q&A's:

How should the servicer evaluate a request for the addition of land to a property securing a mortgage loan? 

Can a request to add land to a property securing the mortgage loan 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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