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E-3.2-13, Addressing Title Defects Generally (12/16/2015)

With respect to each first lien mortgage loan sold to Fannie Mae, the following warranties are made to Fannie Mae:

  • the mortgage is a valid and subsisting lien on the property;

  • the property is free and clear of all encumbrances and liens having priority over it except for liens for real estate taxes, and liens for special assessments, that are not yet due and payable; and

  • the mortgage and any security agreements, chattel mortgages, or equivalent documents relating to it have been properly signed, are valid, and their terms may be enforced by Fannie Mae, its successors, and assigns.

    Note: These warranties are not all inclusive.

The servicer must comply with Fannie Mae’s requirements for addressing title defects, as shown in the following table.

The servicer must…

Take reasonable steps to correct the defect, even if the servicer is not responsible for the selling representations and warranties for the mortgage loan or if the title defect was created by a prior servicer.


Promptly provide the title information to the responsible party if the servicer is not the responsible party.


Correct the title defect as part of the foreclosure process when possible.

Fannie Mae reserves the right, at its option, to pursue other remedies as set forth in the Guides.

Delays by title insurance companies in processing and resolving claims, or disputes with title insurance companies over coverage issues will not excuse the servicer from its correction or repurchase obligations or prevent the imposition of compensatory fees.

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