Servicing Guide

Published September 9, 2020

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What is a "window-period" mortgage loan?

The Garn-St. Germain Depository Institutions Act of 1982, which authorized enforcement of due-on-sale (or due-on-transfer) provisions, exempted certain mortgage loans that were already subject to state law restrictions on due-on-sale (or due-on-transfer) enforcement. Mortgage loans originated or assumed between the time the state enacted its restrictions and the date the Garn-St. Germain Depository Institutions Act went into effect are “window-period” mortgage loans.

The servicer must verify whether a mortgage loan is a “window-period” mortgage loan. If the mortgage loan is a “window-period” mortgage loan, the servicer is authorized to approve a transfer of ownership as long as the criteria listed in the following table are satisfied.

Criteria required to approve a transfer of ownership on window-period mortgage loans
 

The purchaser’s credit and financial capacity are acceptable under Fannie Mae’s current underwriting guidelines (see F-1-29, Reviewing a Transfer of Ownership for Credit and Financial Capacity).

 

The mortgage insurer approves the transfer and the mortgage insurer’s specified conditions are satisfied, if applicable. The servicer must follow the procedures in Obtaining MI Approval for a Conventional Mortgage Loan in F-1-18, Processing a Transfer of Ownership for information on obtaining mortgage insurer approval.

The servicer must follow the procedures in Completing a Transfer of Ownership in F-1-18, Processing a Transfer of Ownership for detailed requirements related to executing an assumption (or assumption and release) agreement.

Note: If the mortgage insurer denies the transfer or imposes conditions for approval, the servicer must inform the parties involved in the transaction of the mortgage insurer’s decision as its reason for not approving the request or the imposition of conditions for approval.

For more information please see: D1-4.1-03, Allowable Exceptions Due to State Law Restrictions (“Window-Period” Mortgage Loans)

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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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