Update to Off-Site Improvement Requirements
Selling Guide, Part VII, Section 102.07, Factory-Built Housing; Part XI, Section 304.01 Manufactured Homes and Section 404.04, Off-Site Improvements. Download FannieMae_Announcement_0801.pdf
The current Fannie Mae appraisal report forms provide a section for the appraiser to comment on off-site improvements (e.g. streets or alleys) and to indicate whether the improvements are publicly or privately maintained.
The appraiser must indicate whether the off-site improvements are typical for the market and comment on any adverse condition related to the off-site improvements, including any effect on the marketability and value of the subject property.
As stated in the Selling Guide, properties should front on a publicly dedicated and maintained street that meets community standards and is generally accepted by area residents. If the property is located on a community-owned or privately-owned and maintained street, Fannie Mae currently requires an adequate, legally enforceable agreement or covenant for maintenance of the street.
Effective on the date of this Announcement, Fannie Mae is expanding the existing requirements to permit the delivery of mortgage loans in communities in which there is no such agreement, provided there are certain state law standards or the lender indemnifies Fannie Mae for losses due to the lack of such agreement. It also clarifies that for purposes of this section, covenants constitute an agreement.
If the property is located on a community-owned or privately-owned and maintained street, Fannie Mae will now require one of the following:
1. An adequate, legally enforceable agreement or covenant for maintenance of the street. The agreement or covenant should include the following provisions and be recorded in the land records of the appropriate jurisdiction:
- Responsibility for payment of repairs, including each party’s representative share;
- Default remedies in the event a party to the agreement or covenant fails to comply with his or her obligations; and
- The effective term of the agreement or covenant, which in most cases should be perpetual and binding on any future owners.
If the property is located within a state that has statutory provisions that define the responsibilities of property owners for the maintenance and repair of a private street, no separate agreement or covenant is required.
2. If the property is not located in a state that imposes statutory requirements for maintenance, and either there is no agreement or covenant for maintenance of the street, or an agreement or covenant exists but does not meet the requirements listed above, the lender must indemnify Fannie Mae for any losses or expenses it may incur due to the physical condition of the street or in order to establish and/or retain access thereto .
The property must continue to meet all other requirements, including any requirements related to adequate vehicular access, as outlined in the Selling Guide. Download FannieMae_Announcement_0801.pdf
Recent Comments