Servicing Guide

Published September 9, 2020

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How is a property purchaser determined to be creditworthy for a transfer of ownership?

The servicer must confirm that the purchaser's credit and financial capacity are acceptable under Fannie Mae's current underwriting guidelines as indicated in the Selling Guide.

For a mortgage loan that has not been modified, the servicer is authorized to use Fannie Mae's automated underwriting system, Desktop Underwriter (DU) to determine the purchaser's credit and financial capacity.

For more information please see: D1-4.2-02: Conventional Mortgage Loans That Include a Due-On-Sale (or Due-on-Transfer) Provision.

The servicer must determine that all of the criteria listed in the following table are satisfied to approve a transfer of ownership.

Criteria required to approve a transfer of ownership to a creditworthy purchaser
 

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 for additional information.

 

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.

If the transfer of ownership is not approved or the required eligibility criteria are not satisfied and the transfer of ownership occurs, the servicer must take all steps necessary to enforce the due-on-sale (or due-on-transfer) provision. If the funds required to satisfy the mortgage loan debt are not received after the mortgage loan is accelerated, the servicer must initiate foreclosure proceedings.

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 the assumption (or assumption and release) agreement.

The servicer must notify the applicable property insurance companies, tax authorities, and any other interested parties. If the purchaser did not provide a new property insurance policy, the servicer must request the insurer to prepare an endorsement to the existing property insurance policy to name the new borrower.

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: D-1-4.2-02: Conventional Mortgage Loans That Include a Due-On-Sale (or Due-on-Transfer) Provision
 

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Customers Recommend Ask Poli

If you have additional questions, Fannie Mae customers can visit Ask Poli to get information from other Fannie Mae published sources.

Guide Resources

For a comprehensive list of resources such as access forms, announcements, lender letters, notices and more.

Visit Selling and Servicing Guide Communications and Forms

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