Servicing Guide

Published November 10, 2020

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What conditions must be met in order to approve a request to subdivide real property?

The servicer must determine whether the request to subdivide real property meets the conditions in the following table.

Conditions required to approve a request to subdivide 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.

 

Any existing structures associated with the collateral property, including but not limited to detached garages, storage sheds, or accessory dwelling units, must be located completely within the boundaries of a single lot created through the subdivision.

 

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

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

If the subdivision of real property... Then the servicer...
meets all of the conditions and the LTV based on the estimated property value after the subdivision is less than 60% is authorized to approve the subdivision of real property on Fannie Mae’s behalf.
meets all of the conditions and the LTV based on the estimated property value after the subdivision is greater than or equal to 60% is authorized to approve the subdivision of real property 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 subdivision.
does not meet any of the conditions must deny the request.

How should the servicer evaluate a request to subdivide real property? See below for related Q&A's:

Can a request to subdivide 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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