#Fannie mae hobby farm full#

If the current appraised value is $225,000, $50,000 for land and $175,000 for improvements, the purchase price would be $50,000 (the current appraised value of the land, because it is less than 25% of $225,000).Rental income is an acceptable source of stable income if it can be established that the income is likely to continue. The amount that results when the percentage of the total original appraised value that represented the land alone is applied to the current appraised value of the land and improvements.įor example, assume that the total original appraised value for a property was $160,000, and the land alone was valued at $40,000 (thus representing 25% of the total appraised value). The current appraised value of the land, or The purchase price of the land should be the lower of the following: Will be constructed after the lease is executed. Leases may be offered with or without a limitation on increases or decreases in the rent payments. The purchase price may be adjusted annually during the term of the lease to reflect the percentage increase or decrease in the index from the preceding year. The initial land rent should be established as a percentage of the appraised value of the land on the date that the lease is executed. The initial purchase price should be established as the appraised value of the land on the date the lease is executed.Īlready constructed at the time the lease is executed, and the lease is tied to an external index, such as the Consumer Price Index (CPI). The option to either cure the default or take over the borrower’s rights under the lease.Īlready constructed at the time the lease is executed. The right to receive a minimum of 30 days’ notice of any default by the borrower, and The loan must be serviced in compliance with the leasehold servicing requirements in the Servicing Guide. The lease must include provisions to protect the mortgagee’s interests in the event of a property condemnation. The lease must not include any default provisions that could give rise to forfeiture or termination of the lease, except for nonpayment of the lease rents.

#Fannie mae hobby farm full#

The lease must be valid, in good standing, and in full force and effect in all respects. The lease must provide that in addition to the obligation to pay lease rents, the borrower will pay taxes, insurance, and homeowners’ association dues (if applicable), related to the land in addition to those they are paying on the improvements. The lease must provide for the borrower to retain voting rights in any homeowners’ association. The lessor may not require a credit review or impose other qualifying criteria on any assignee, transferee, mortgagee, or sublessee. The lease must provide that the leasehold can be assigned, transferred, mortgaged, and sublet an unlimited number of times either without restriction or on payment of a reasonable fee and delivery of reasonable documentation to the lessor. The term of the leasehold estate must run for at least five years beyond the maturity date of the loan, unless fee simple title will vest at an earlier date in the borrower. In the event the mortgage is secured by a sublease of a leasehold estate, the documents must provide that a default under the leasehold estate will not by such default result in the termination of the sublease.įor leasehold appraisal requirements, see B4-1.4-05, Leasehold Interests Appraisal Requirements. The leasehold estate and the mortgage must not be impaired by any merger of title between the lessor and lessee. The leasehold estate and the improvements must The mortgage must be secured by the property improvements and the borrower’s leasehold interest in the land. Mortgages secured by manufactured homes located on leasehold estates are not eligible unless the property is in a condo or PUD project approved by Fannie Mae’s Project Eligibility Review Service.

Fannie Mae purchases or securitizes fixed-rate and adjustable-rate first-lien loans that are secured by properties on leasehold estates in areas in which this type of property ownership has received market acceptance.