Servicing Guide

Published November 10, 2020

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What should the servicer do if they believe that a due-on-transfer is unenforceable by law or a court?

For a mortgage loan acquired by Fannie Mae after June 1, 2007, if a servicer reasonably believes that a due-on-transfer provision is unenforceable by law or would not be enforced by a court, the servicer is authorized to approve a transfer of an interest in the mortgaged property or a direct or indirect interest in the borrower (if an entity), provided the servicer has notified Fannie Mae’s Legal department (see F-4-03, List of Contacts) of the reason for its belief and Fannie Mae has either sent a notice of non-objection to the proposed transfer or not responded within 60 days of its receipt of the notice.

For more information please see: D1-4.1-02, Allowable Exemptions Due to the Type of Transfer

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