Fannie Mae Servicing Guide D1-4.1-04 — Transfers of Ownership by Grant Deed

Fannie Mae Servicing Guide D1-4.1-04 — Transfers of Ownership by Grant Deed

D1-4.1-04, Transfers of Ownership by Grant Deed (11/12/2014) Introduction This topic contains information on transfers of ownership by grant deed. Published May 13, 2026 274 The servicer must not consent to any transfer of ownership by a grant deed involving a party that indicates its services will relieve the borrower of their mortgage loan debt. The following table lists the servicer’s responsibilities if it learns that the borrower has been contacted by such a party proposing the execution of a grant deed. ✓ The servicer must... Explain to the borrower that the transfer of ownership will not be acknowledged, that the borrower will not be relieved of the mortgage obligation, and that foreclosure proceedings may be initiated if the property is transferred. Work with a borrower who has experienced a hardship to determine whether any workout options are appropriate. See D2-3, Fannie Mae’s Home Retention and Liquidation Workout Options for additional information. The servicer must contact its Fannie Mae Servicing Representative (see F-4-02, List of Contacts) if it is contacted by a party about accepting a short payoff for a property that it obtained through the borrower’s execution of a grant deed. Under no circumstances should the servicer negotiate the short payoff. Fannie Mae generally will advise the servicer either to accept a Mortgage Release or to initiate foreclosure proceedings. The servicer must follow the procedures in Responding to a Title Transferred via Grant Deed in F-1-17, Processing a Transfer of Ownership for transfers of ownership by a grant deed. Recent Related Announcements There are no recently issued Announcements related to this topic. D1-4.1-05, Enforcing the Due-on-Sale (or Due-on-Transfer) Provision (11/08/2017) Introduction This topic contains information on enforcing the due-on-sale (or due-on-transfer) provision. Unless the transfer of ownership is an exempt transaction or involves a property that secures a “window-period” mortgage loan, the servicer must accelerate the debt. The servicer must send any notices required under the terms of the mortgage loan and applicable law before it accelerates the debt. If the funds required to satisfy the debt are not received, the servicer should then begin foreclosure proceedings. Published May 13, 2026 275 When the servicer learns that a transfer of ownership has occurred, it should notify the property purchaser that the mortgage loan is due and payable. For a whole mortgage loan or a participation pool mortgage loan held in Fannie Mae’s portfolio, the servicer should provide 30 days notice to the purchaser to pay the mortgage loan balance in full or to apply and qualify for a new mortgage loan. If neither is received within 30 days, the servicer should institute foreclosure proceedings. Under certain circumstances, Fannie Mae may consider the following alternatives: Waiver for mortgage loans in default. See Allowing a Delinquent Mortgage Loan to Be Assumed in D2-3.4-04, Qualifying Mortgage Assumption Workout Option for information on mortgage loan assumptions. Optional repurchase of certain mortgage loans. See A1-3-01, Requirements for Voluntary Repurchase for additional information. Potential litigation. If the legality of the due-on-sale (or due-on-transfer) provision is questioned or litigated, see D1-6-02, Handling Notices of Liens, Legal Action, Other Actions Impacting Fannie Mae’s Interest for Fannie Mae’s requirements for handling the action. Recent Related Announcements There are no recently issued Announcements related to this topic. Section D1-4.2, Information Relating to Transfers of Ownership on Conventional Mortgage Loans D1-4.2-01, Conventional Mortgage Loans that Do Not Include a Due- on-Sale (or Due-on-Transfer) Provision (09/09/2020) Introduction This topic contains information on conventional mortgage loans that do not include a due-on-sale (or due-on- transfer) provision. The following table describes the servicer’s responsibility if a mortgage loan not subject to a due-on-sale (or due-on-transfer) provision is modified or subject to a payment deferral. Published May 13, 2026 276 If the mortgage loan not subject to a due- on-sale (or due-on-transfer) provision is... Then the servicer must... modified obtain the borrower’s agreement that the mortgage loan modification will cancel the assumability feature of that mortgage loan. subject to a payment deferral notify the borrower that the non-interest bearing balance must be paid in full at the time of any sale or transfer. See D1-4.2-02, Conventional Mortgage Loans That Include a Due- on-Sale (or Due-on-Transfer) Provision for additional information. For all other mortgage loans that are not subject to a due-on-sale (or due-on-transfer) provision, there are no restrictions on the transfer of ownership. However, the servicer must determine that the purchaser’s credit and financial capacity is acceptable under current Fannie Mae underwriting guidelines if the previous borrower requests a release of liability. See F-1-28, Reviewing a Transfer of Ownership for Credit and Financial Capacity for the servicer’s requirements for evaluating a request for a release of liability. The servicer must follow Obtaining MI Approval for a Conventional Mortgage Loan in F-1-17, Processing a Transfer of Ownership for information on obtaining mortgage insurer approval and in Completing a Transfer of Ownership in F-1-17, 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, the mortgage insurer, 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. The servicer must also obtain a new MI policy for an insured mortgage loan or an agreement that extends the previous coverage to the new borrower. Recent Related Announcements The table below provides references to recently issued Announcements that are related to this topic. Announcements Issue Date Announcement SVC-2020-04 September 9, 2020 Published May 13, 2026 277 D1-4.2-02, Conventional Mortgage Loans That Include a Due- on-Sale (or Due-on-Transfer) Provision (11/08/2017) Introduction This topic contains the following: Determining When to Refer to the Participating Lender’s Policy Non-Exempt Transactions: Exceptions for Certain Loan Types if the Purchaser is Creditworthy Determining When to Refer to the Participating Lender’s Policy The servicer must refer to the participating lender’s policies for the following mortgage loans as Fannie Mae’s policies do not apply: Participation pool mortgage loans held in portfolio that were purchased from a supervised lender under commitments dated before August 1, 1983. Concurrent sales participation pool mortgage loans in which it holds a majority interest. Non-Exempt Transactions: Exceptions for Certain Loan Types if the Purchaser is Creditworthy The servicer is authorized to allow transfers of ownership for the following first lien mortgage loans if all of the criteria listed below are satisfied: All ARMs and GPARMs, except for the following: those closed under ARM Plans 975, 1029, and 1103; those that have extended fixed-rate periods (ARM Plans 659, 660, 661, 750, 751, 1423, 1437, 2724, 2725, 2726, 2727, 2728, 2729, 3223, 3224, 3225, 3226, 3227, 3228, 3252 (except as limited for those plans that may be used for Texas Section 50(a)(6) loans), if the transfer would take place during the fixed-rate period); and those that have been converted to fixed-rate mortgage loans. Fixed-rate portfolio mortgage loans that Fannie Mae purchased under commitment contracts dated before November 10, 1980 unless the purchase of the property is financed directly or indirectly with wraparound or secondary financing from an institutional lender, or Fannie Mae has pooled a mortgage loan originally held as a portfolio mortgage loan to back an MBS. Fannie Mae will notify the servicer when it does this. The servicer must determine that all of the criteria listed in the following table are satisfied to approve a transfer of ownership. Published May 13, 2026 278 ✓ 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-1-28, 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-1-17, Processing a Transfer of Ownership for information on obtaining mortgage insurer approval. 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. Before approving a transfer of ownership for a pledged-asset mortgage loan, the servicer must determine that the pledged asset will remain in place through the assignment of the original pledged asset or the substitution of a new asset of equivalent value. The servicer must contact its Fannie Mae Servicing Representative (see F-4-02, List of Contacts) to discuss the acceptability of a substitute asset or any other alternative the purchaser proposes. As second lien mortgage loans are not assumable under the existing terms, if the servicer of a second lien mortgage loan is notified that a prospective purchaser wishes to assume a second lien mortgage loan, it must advise the servicer of the first lien mortgage loan, the borrower, and the proposed property purchaser that the second lien mortgage loan debt will be accelerated if the transfer takes place. This is true even if Fannie Mae holds the first lien mortgage loan and allows it to be assumed under its existing terms. If the servicer learns of the transfer after the fact, it should notify all parties that the second lien mortgage loan is in default and that steps will be taken to accelerate the debt. The servicer must then contact its Fannie Mae Servicing Representative (see F-4-02, List of Contacts) for approval of the acceleration. 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-1-17, 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. Recent Related Announcements There are no recently issued Announcements related to this topic. Published May 13, 2026 279 Section D1-4.3, Information Relating to Transfers of Ownership on Government Mortgage Loans

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