FNMA and Short Sale Restrictions on Resales
Thursday, August 25, 2011
When FNMA (Federal National Mortgage Association or Fannie Mae) is the Seller of a property, there may be a restriction against a quick resale or refinance of the property. This restriction would be found in the FNMA Addendum required to be attached to the Sales Agreement and in the Limited Warranty Deed. This restriction usually prohibits the new owner from selling or refinancing the property for, typically, 90 days after closing for more than 120-125% of the purchase price paid by the new owner to FNMA.
Another restriction upon a quick resale (usually 30 days) appears in many bank short sale approval letters, where the lender may reserve the right to revoke and rescind the short sale approval if the new owner ignores this restriction. This would create a huge problem and title issue for both the Seller and the new owner, and title insurance may not protect the new owner who violates this restriction.
- Scott Askew (with help from Neel & Robinson Attorneys)
Posted in: Intown Atlanta Real Estate News