F-1-28, Reviewing a Transfer of Ownership for Credit and Financial Capacity (06/12/2019)

Prior to approving a release of liability, the servicer must determine that the transferee's credit and financial capacity is acceptable as required in Chapter D1-4, Transfers of Ownership and D1-1-01, Evaluating a Request for the Release, or Partial Release, of Property Securing a Mortgage LoanD1-1-01, Evaluating a Request for the Release, or Partial Release, of Property Securing a Mortgage Loan.

The servicer must refer to the following Selling Guide topics to determine whether the transferee's credit and financial capacity is acceptable in accordance with Fannie Mae's underwriting guidelines:

• Selling Guide B1-1, Application Package Documentation;

• Selling Guide B2-2, Borrower Eligibility;

• Selling Guide B3-3, Income Assessment;

• Selling Guide B3-4, Asset Assessment;

• Selling Guide B3-5, Credit Assessment; and

• Selling Guide B3-6, Liability Assessment.

For a mortgage loan that has not been modified, the servicer is authorized to use Fannie Mae's automated underwriting system, Desktop Underwriter (DU) (see the Selling Guide B3-2, Desktop Underwriter (DU)) to determine the transferee's credit and financial capacity. If a servicer is not authorized to access DU, the servicer can obtain access by contacting Fannie Mae (see F-4-02, List of ContactsF-4-02, List of Contacts).

If utilizing DU, the servicer must

• submit the transaction as a limited cash-out refinance in DU, and

• use the original value of the property as defined in the Selling Guide.

Note: For a mortgage loan that has been modified, the servicer must contact Fannie Mae to determine the transferee's credit and financial capacity (see F-4-02, List of ContactsF-4-02, List of Contacts ).

The servicer must follow the procedures in Obtaining MI Approval for a Conventional Mortgage Loan in F-1-17, Processing a Transfer of OwnershipF-1-17, Processing a Transfer of Ownership for information on obtaining mortgage insurer approval, if applicable.

The following table provides the requirements for evaluating a request for a release of liability.