Section 304

Title Insurance

Requirements

You must ensure that every Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. is covered by an ALTAALTAAmerican Land Title Association title policy or comparable title policy approved for use in the applicable jurisdiction.

The title policy must:

  • be issued by a title company that is authorized to issue title policies where the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). is located;
  • be in the original amount of the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. , including all advances held in escrow or reserves;
  • be no less than the amount of the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. allocated to each PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). , if the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. is secured by multiple properties;
  • insure for the benefit of Fannie Mae;
  • insure the first priority LienLienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. of the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. , subject only to the Permitted EncumbrancesPermitted EncumbrancesThe following permitted title exceptions: lien of current real property taxes, water charges, sewer rents and assessments not yet due and payable; covenants, conditions and restrictions, rights of way, easements and other matters of public record acceptable to the Lender and specifically…, unless it is a Supplemental Mortgage LoanSupplemental Mortgage LoanMortgage Loan purchased by Fannie Mae that is subordinated to, and has a Mortgage Loan Origination Date after, the Senior Mortgage Loan that is also owned by Fannie Mae. ;
  • be in full force and effect with
    • all premiums paid,
    • no claims made by you or another lender, and
    • no claims paid;
  • insure the legal description of the insured property is identical to the legal description of the property shown on any required survey;
  • contain:
    • a Comprehensive Endorsement (ALTAALTAAmerican Land Title Association Form 9 or equivalent);
    • an Environmental Protection Lien Endorsement (ALTAALTAAmerican Land Title Association Form 8 or equivalent) that only takes exception for a statute that could give an environmental protection LienLienLien, mortgage, bond interest, pledge, security interest, charge, or encumbrance of any kind. priority over the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. ;
    • a Mortgage Tax Endorsement (ALTAALTAAmerican Land Title Association Form 38.06 or equivalent) if the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. is secured by an amended and restated Security InstrumentSecurity InstrumentInstrument creating a lien or encumbrance on 1 or more Properties and securing the obligations under the Loan Documents. , such as a New York Consolidation, Extension, and Modification Agreement (Form 6025.NY.CEMA), or a Florida Consolidated, Amended, and Restated Mortgage (Form 6025.FL.AR); and
    • appropriate Endorsements such as:
      • Zoning (where available);
      • CondominiumCondominiumStatutorily established Property ownership regime where Condominium Documents designate: individual units for separate ownership; and common areas for shared use and joint ownership by the unit owners. ;
      • PUD;
      • Variable Rate;
      • Leasehold Mortgage;
      • Location;
      • Unlocated Easements; and/or
      • Contiguity-Multiple Parcel;
  • delete the standard survey exception;
  • include a note on Schedule B, Part II listing you as the secured party and Fannie Mae as the assignee, for any financing statement filed in the recording office;
  • not list any financing statement as an exception on Schedule B, Part I; and
  • insure that any taxes, assessments, or other lienable items are not yet due and payable.
304.01

Title Insurance Company

Guidance

The title company should have a satisfactory rating and adequate reserves.

304.02

Policy Form

Guidance

If the policy form meets all requirements of this Section, Fannie Mae will accept the standard 2021 or 2006 ALTAALTAAmerican Land Title Association forms of title insurance policies.

In those states where ALTAALTAAmerican Land Title Association forms of coverage are not approved by the state insurance board or commission, you should get the closest equivalent alternative coverage.

304.03

Electronic Policies

Guidance

You may use electronically issued title policies if the coverage is enforceable against the insurer.

304.04

Insured

Guidance

The title policy should

  • name you as the insured, and
  • insure Fannie Mae when the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. is delivered (either by reference to your “successors and assigns, as their interests may appear” or by direct reference to Fannie Mae).
304.05

Effective Date

Requirements

You must have title coverage in effect (i.e., the date of the signed pro forma policy or marked-up commitment) when you fund the Mortgage LoanMortgage LoanMortgage debt obligation evidenced, or when made will be evidenced, by the Loan Documents, or  a mortgage debt obligation with a Fannie Mae credit enhancement. .

Guidance

The issued title policy should be later-dated to cover the Assignment of Security Instrument’s recording date.

304.06

Survey Exception

Guidance

If the title policy includes exceptions to matters shown on a recorded map or plat, the exceptions should be specifically described.

304.07

Exception for Taxes, Assessments, or Other Lienable Items

Guidance

If any taxes could become delinquent within 60 days after closing, you should require payment at closing.

304.08

Financing Statements

Guidance

Any financing statement not filed in the recording office (such as a Uniform Commercial Code filing) may be shown as an informational note on Schedule B, Part II.

304.09

Endorsements
304.09A

Generally

Guidance

You should get an appropriate ALTAALTAAmerican Land Title Association form of endorsement that is incorporated into the “base” title policy.  In jurisdictions where an ALTAALTAAmerican Land Title Association form is not available, you may include in Schedule B an equivalent form of endorsement or affirmative coverage.

304.09B

Environmental Protection Lien Endorsement

Guidance

Super Lien statutes that may be included in the ALTAALTAAmerican Land Title Association Form 8.1 endorsement are listed in the Acceptable Super Lien Statutes (Form 6506).

304.09C

Comprehensive Endorsement

Guidance

You should consider whether an adverse circumstance affecting the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). would be an acceptable exception on Schedule B, Part I.  Examples include:

  • encroachments onto the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). ;
  • easements or rights of way over the PropertyPropertyMultifamily residential real estate securing the Mortgage Loan, including the fee simple or Leasehold interest, Improvements, and personal property (per the Uniform Commercial Code). ;
  • encroachments by the ImprovementsImprovementsBuildings, structures, improvements, and alterations, including the multifamily housing dwellings, now constructed or hereafter constructed or placed on the land upon which the Property is located, together with all fixtures (as defined in the Uniform Commercial Code). onto adjoining land; and
  • violations of existing covenants, conditions, and restrictions.
304.10

Document Retention

Guidance

You should keep copies of any restrictions shown as exceptions in the title policy (such as easements and encumbrances) in your Servicing FileServicing FileYour file for each Mortgage Loan serviced. .