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8401.1: Partial releases and easements (03/02/16)

8401.1: Partial releases and easements (03/02/16)

Owned by Kacey Olson (Unlicensed)
Nov 23, 2018

© Freddie Mac Single-Family Seller Servicer Guide

(a) Processing requests for partial releases and granting of easements A Servicer may receive a request to release part of the Mortgaged Premises or a request to approve the granting of an easement on a portion of the Mortgaged Premises. A partial release may be initiated at the Borrower's request or as a result of some other action such as a condemnation or a taking of the property by eminent domain. Except as noted below, the Servicer must obtain an appraisal report with an interior and exterior inspection that meets the requirements of Chapter 5601when considering such requests in order to determine the value of the Mortgaged Premises immediately before the release and the estimated value after the release. The Servicer, under its delegated authority, may approve a request to release a portion of the Mortgaged Premises or to grant an easement provided the following conditions are met:

  1. The Borrower's monthly Mortgage payment is current at the time of the request, and there is no change in the expectation that the Borrower can continue to make the monthly payment
  2. The Servicer has received written approval of the FHA, VA, RHS or MI and all superior lien-holders, if applicable
  3. At least 12 months have passed since the Origination Date
  4. Either of the situations and the corresponding actions in the chart below are met:

Situation

Action

If

·       The current loan-to-value (LTV) ratio of the Mortgage based on the value obtained at origination (as described in Section 4203.1) is less than 60%, and

·       The consideration the Borrower receives for the release or easement is not greater than 5% of the original value (this would include situations in which the Borrower receives no consideration), and

·       The transaction is arm's-length

Then

·       An appraisal is not required

·       The Borrower is not required to apply the consideration received for the release or easement to reduce the UPB of the Mortgage

If

·       The current LTV ratio of the Mortgage based on original value is equal to or greater than 60%, or

·       The consideration the Borrower receives for the release or easement is greater than 5% of the original value or no consideration is received

Then

·       The Servicer must order a new appraisal with interior and exterior inspection that provides current and estimated after release values, and

·       The UPB of the Mortgage must be reduced in an amount sufficient to maintain the same LTV ratio, as determined by the appraisal immediately before the release or easement is granted. However, if based on the estimated value after the release the LTV ratio is less than 60%, the Borrower is not required to reduce the UPB of the Mortgage.

Notwithstanding the above, the Servicer may require that any consideration received by the Borrower for the released land or easement be applied to the UPB of the Mortgage, if the Servicer determines that the intended use of the released land or easement would adversely affect the value or use of the remaining Mortgaged Premises. Upon release, the Servicer must ensure that all applicable tax authorities are notified for adjustment of applicable assessments. The Servicer is responsible for ensuring that the title of the Mortgaged Premises after the release remains a valid First Lien as required in Section 4201.2 and the title insurance meets the requirements of Chapter 4702 after the release or easement has been granted.

If any of the above conditions are not met, the Servicer must submit the request to Freddie Mac (see Directory 5), together with the following documentation:

  • A copy of the written request from the Borrower or governmental agency requesting the release or easement
  • A copy of a current appraisal with an interior and exterior inspection that is ordered by the Servicer shows:
  1. The value of the Mortgaged Premises immediately before the release, and
  2. An estimated value of the remaining Mortgaged Premises after the release
  • Verification that the Borrower is current on his/her monthly Mortgage payments
  • A copy of the FHA, VA, RHS or MI approval, if applicable
  • A copy of the new plat or survey showing the proposed release or easement
  • A copy of the recorded Security Instrument including the legal description
  • Any other documentation related to the request

(b) Additional requirements for easements In addition to the requirements noted in Section 8401.1(a), the Servicer must ensure that any special requirements for the granting of an easement as specified in the Security Instrument are met.