Servicing Guide

Published November 10, 2020

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What conditions must be met in order to approve a request to lease a portion of the property for the installation of any semi-permanent structure?

The servicer must determine whether the request to lease real property for the installation of a semi-permanent structure meets the conditions in the following table.

Conditions required to approve the installation of a semi-permanent structure
 

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.

 

Exercise of the lease does not prevent its use for residential purposes or expose the residents to health or safety hazards.

 

The installed structure lies outside of a 500-foot radius from the dwelling and any additional structures, including but not limited to detached garages, storage sheds, or accessory dwelling units.

The servicer must evaluate requests to lease real property for the installation of a semi-permanent structure based on the specific circumstance of the request, as described in the following table.

If leasing a portion of the real property for the installation of a semi-permanent structure... Then the servicer...
meets all of the conditions and the LTV based on the estimated property values with the semi-permanent structure installed is less than 60% is authorized to approve the lease on Fannie Mae’s behalf and waive Fannie Mae’s interest in any contractual payments under the current terms of the lease.
meets all of the conditions and the LTV based on the estimated property value with the semi-permanent structure installed 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 its LTV ratio equivalent to its LTV ratio immediately prior to the lease becoming effective.
does not meet any of the conditions. must deny the request.

How should a request to lease real property for the installation of a semi-permanent structure be evaluated? 

What must be done prior to approving any agreement that relates to the placement of a semi-permanent structure on the property? 

Can a request to lease a portion of property for the installation of any semi-permanent structure 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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