D1-1-01: Evaluating a Request for the Release, or Partial Release, of Property Securing a Mortgage Loan (11/12/2014)

© Fannie Mae Single Family Servicing Guide

Evaluating a Request for the Release of a Beneficial Easement or the Grant of a Burdensome Easement

When a borrower requests a release or grant of an easement, the servicer must ensure that the borrower submits all of the information listed in the following table with the Application for Release of Security (Form 236).

Request for the Release of a Beneficial Easement: The servicer must evaluate the request for the release of a beneficial easement based on whether or not the release will have a detrimental effect on the value of the property securing a mortgage loan. The following table describes the servicer's action based upon the impact to the property securing a mortgage loan.

Request for the Grant of a Burdensome Easement: The servicer must evaluate the request for the granting of a burdensome easement based on the extent to which granting a burdensome easement interferes with either the use or value of the property securing a mortgage loan, which depends on the following:

• the degree and quantity of rights that are released with the easement;

• the community’s customs, attitudes, and prevalent practices regarding such easements; and

• the manner and extent of the use of the easement.

The servicer is authorized to approve any request for a customary public utility easement as long as

• A subsurface utility easement does not extend under the house or other improvements to the property.

• An above-surface utility easement for distribution purposes that runs along any of the property lines or easements for drainage purposes that run along the rear property line if the easements do not extend more than 12 feet from the property line, do not interfere with any of the improvements or use of the property, and do not present a health or safety hazard.

The servicer must evaluate requests for other types of easements based on the specific circumstance of the request, as described in the following table.

If a request to grant a burdensome easement includes subordinating the mortgage lien to the easement, the servicer is authorized to agree on Fannie Mae's behalf to subordinate the mortgage lien to the easement if

• the easement is the type that is customary in the area and does not interfere with the property owner’s use or enjoyment of the property, and

• any cash consideration is applied to the outstanding mortgage loan debt in accordance with the mortgage loan documents.

Evaluating a Request for the Lease of Oil, Gas, or Mineral Rights

When a borrower wants to lease oil, gas, or mineral rights to the property, the servicer must ensure that the borrower submits a copy of the proposed lease agreement with Form 236.

Before agreeing to a lease of oil, gas, or mineral rights, the servicer must consider the extent to which the subject property and neighboring properties may be affected by the exercise of the rights covered in the lease. In particular, the following should be taken into consideration:

• The extent to which the rights granted by the lease infringe on the property owner’s rights. For example, if the lease permits removal of deposits by directional exploration from an area outside of the property, there may be little or no adverse effect, depending on the location of the exploration area and the attitude of the community. On the other hand, if the lease allows for complete ingress and egress to explore any part of the property or to store or install equipment on it, the property may no longer have any real value as a residential property.

• Any hazards, nuisances, or damages that may result from the exercise of the rights granted by the lease. In mineral areas where subsidence from directional mining may be a problem, the potential extent of a hazard or nuisance can be determined by reviewing the past history of such operations in the locality and taking into consideration the property’s subsurface soil structure and the extent and depth of the proposed mining. In oil-producing areas, hazards, nuisances, and damages can result from drilling operation, ingress and egress, storage, pipeline transportation, fire, explosion, or gusher wells. The effect of these potential hazards or nuisances on the value of the property would depend on their intensity and closeness and the community’s attitude toward such hazards or nuisances. For example, in areas in which oil exploration is a major part of the economy, the risk may be considered acceptable, whereas it might be unacceptable in areas in which such exploration has a minor effect on the economy.

The servicer must determine whether the leasing of oil, gas, or mineral rights meets the following conditions:

• granting of oil, gas, or mineral leases is customary in the area;

• exercise of the lease does not have a material impact on the value of the property securing a mortgage loan;

• exercise of the lease does not prevent use of the property as a residence; and

• exercise of the lease does not expose the residents to health or safety hazards.

The following table describes the servicer’s action based upon whether or not granting of the lease meets these conditions.

Evaluating a Request for the Partial Release of Real Property

The servicer is authorized to approve partial releases of security on Fannie Mae’s behalf if all of the conditions in the following table are satisfied.

If the servicer is uncertain about whether all of the conditions have been met or if it has information that there are mitigating circumstances for permitting the release even though all of the conditions have not been met, the servicer may contact Fannie Mae’s SF CPM division (see F-4-03, List of Contacts).

Evaluating a Request for the Partition of Real Property

The servicer has the authority to approve a partition of real property on Fannie Mae’s behalf if all of the conditions in the following table are satisfied.

If the servicer is uncertain about whether all of the conditions have been met or if it has information that there are mitigating circumstances for permitting the release even though all of the conditions have not been met, the servicer may contact Fannie Mae’s SF CPM division (see F-4-03, List of Contacts).

If the mortgage loan consists of multiple borrowers and the request for the partition of real property includes a request to release the borrower who has possession of the partitioned property from liability under the mortgage loan, the servicer is authorized to approve the request if the borrower who retains possession of the property securing a mortgage loan has the financial ability to make the mortgage loan payments.

Evaluating a Request for the Substitution of Property Securing a Mortgage Loan

The servicer must submit all requests for the substitution of property securing a mortgage loan, along with its recommendation, to Fannie Mae’s SF CPM division (see F-4-03, List of Contacts). Prior to submitting the request to Fannie Mae, the servicer must take the actions listed in the following table.

If Fannie Mae approves the substitution of property securing a mortgage loan, the servicer must take the actions described in the following table.

Evaluating a Request for the Partial or Total Taking of Property Securing a Mortgage Loan by Condemnation or Eminent Domain

The servicer must do and pay for whatever is necessary to protect Fannie Mae’s interest in the property securing the mortgage loan when there is a legal proceeding that may significantly impact Fannie Mae’s interest. The servicer must follow the procedures in Protecting Fannie Mae’s Rights Regarding Taking of Property by Condemnation or Eminent Domain in F-1-04, Evaluating a Request for the Release, or Partial Release, of Property Securing a Mortgage Loan to protect Fannie Mae’s interest in the property and Fannie Mae’s rights under the security instrument.

The servicer must refer to the terms of the security instrument to determine how compensation awards are to be distributed in the event of either a partial taking or total taking of a property securing a mortgage loan. However, the terms of the security instrument permit some flexibility in determining how the proceeds should be applied if the borrower has abandoned the property or does not acknowledge a specific offer to award compensation or settle a claim.

The servicer is authorized to agree to Form 236 related to a partial or full taking of the property if the compensation award is sufficient to fully satisfy the mortgage debt. However, if the mortgage loan debt will not be fully satisfied in connection with a full taking of the property, the servicer should contact Fannie Mae’s SF CPM division (see F-4-03, List of Contacts) to determine the action Fannie Mae wants it to take. If the borrower has abandoned the property or fails to respond within 30 days to the servicer’s notification that the government has offered to pay a compensation award or settle a claim for damages in connection with a condemnation or taking by eminent domain, the servicer may disburse the proceeds without contacting the borrower. Generally, the servicer must apply the proceeds to reduce the mortgage loan debt unless there is only a partial taking of the property securing a mortgage loan and foreclosure proceedings have been initiated. In such cases, the servicer must contact Fannie Mae’s SF CPM division (see F-4-03, List of Contacts) to determine how to apply the proceeds, as Fannie Mae may prefer to use the proceeds to restore or repair the property.