Selling Guide

Published April 1, 2020

The Selling Guide is organized into parts that reflect how lenders generally categorize various aspects of their business relationship with Fannie Mae. To begin browsing, select from any of the sections below. You may also download the entire Selling Guide in PDF format.

View All Selling Policy Updates

Download PDF

Hint: Ask in a form of a question.

How are mortgage loans subject to unexpired redemption periods handled?

Title Impediment – Mortgage Loans Secured by Properties with Unexpired Redemption Periods

Certain state laws provide a “redemption period” after a foreclosure or tax sale has occurred, during which time the property may be reclaimed by the prior mortgagor or other party upon payment of all amounts owed. The length of the redemption period varies by state and does not expire automatically upon sale of the property to a new owner. Although an unexpired redemption period will generally be deemed to be an unacceptable title impediment, Fannie Mae will consider it to be acceptable provided the following requirements are met:

Requirements for Mortgage Loans Subject to Unexpired Redemption Periods
 

The property must be located in a state where it is common and customary to sell single-family residential property during the redemption period.

Note: Loans representing the purchase of Fannie Mae-owned properties which have been sold during the redemption period may be subject to separate negotiations. Lenders should contact their lead Fannie Mae regional office for additional information.

 

The mortgagee policy of title insurance must take specific exception to the unexpired right of redemption but also affirmatively insure the mortgagee against all loss arising out of the exercise of any outstanding right of redemption, without qualification.

 

If any party exercises a right to redeem the mortgaged property, the mortgage must be paid off directly out of the redemption proceeds with no requirement for any further action or claim for repayment.

 

The lender must indemnify Fannie Mae (as described in A2-1-03, Indemnification for Losses) for any losses incurred by Fannie Mae that can be directly attributed to the exercise by any party of a right to redeem the mortgaged property, including without limitation, a loss related to borrower default due to a dispute with the redeeming party over the terms of the redemption.

Note: Fannie Mae strongly encourages lenders to provide written disclosure to borrowers of properties that are subject to unexpired redemption periods if not otherwise required by law (or disclosed by the title company).

See B7-2-05, Title Exceptions and Impediments for additional information.

Related Articles

B7-2-01, Provision of Title Insurance (04/01/2009)

IntroductionThis topic contains information on provision of title insurance. Provision of Title Insurance Before purchase or securitization, each first...

Read more

B7-2-02, Title Insurer Requirements (06/05/2019)

IntroductionThis topic contains the following: Title Insurer Requirements  Insurer Covered by Reinsurance  Title Insurer Requirements A title...

Read more

B7-2-03, General Title Insurance Coverage (03/31/2015)

IntroductionThis topic contains information on general title insurance coverage. Terms of Coverage  Effective Date of Coverage  Amount of...

Read more

Have guide questions? Get answers to all of your policy questions, straight from the source.

Get Started
X
Having Issues with Seeing this Page Correctly?

Use Firefox or Chrome   How to do a hard refresh in Internet Explorer
We recommend that you use the latest version of FireFox or Chrome.

Download Firefox
Download Chrome
  A hard refresh will clear the browsers cache for a specific page and force the most recent version of a page.
    Hold the Ctrl key and press the F5 key.
     

Email Us
If you still have Technical Support questions, feel free to emailAsk_Poli@fanniemae.com.