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Fannie Mae Selling Guide Land Contract

Fannie Mae Selling Guide: Understanding Land Contracts

If you`re a homeowner looking to sell your property, you may have come across the term “land contract” in your research. A land contract, also known as a “contract for deed” or “installment sale agreement,” is a popular alternative to traditional home sales.

In a land contract, the seller finances the sale of the property by accepting payments from the buyer over a set period of time, often with interest. The seller retains legal ownership of the property until the buyer has paid off the contract in full.

If you`re considering a land contract, it`s important to understand the guidelines set forth by Fannie Mae, the government-sponsored enterprise that sets standards for mortgage lending and buying. Fannie Mae`s Selling Guide provides comprehensive details on the eligibility requirements and guidelines for land contracts.

Here are some key points to keep in mind when considering a land contract:

Eligibility Requirements: Fannie Mae prohibits the use of land contracts for properties that are listed for sale or marketed as “for sale by owner” on any website or through any publicly available advertising. The property must also have an appraised value that meets Fannie Mae`s standards.

Documentation: The seller must provide a copy of the land contract to the buyer and submit a copy to the lender. The contract must include the purchase price, the payment schedule, the interest rate, and the length of the contract.

Insurance: The buyer is required to obtain homeowner`s insurance and name the seller as a loss payee on the policy. The seller must also maintain hazard insurance on the property until the contract is paid in full.

Title: The seller must provide clear title to the property at the time of the sale. If there are any liens or encumbrances on the property, they must be resolved before the sale can be finalized.

Default: If the buyer defaults on the land contract, the seller has the right to terminate the contract and retain all payments and improvements made by the buyer. The seller must provide a written notice of default and an opportunity to cure the default before terminating the contract.

Ultimately, a land contract can be a viable option for both buyers and sellers who are unable to obtain traditional financing. By understanding the guidelines set forth by Fannie Mae, you can ensure a smooth and successful transaction.

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