Title Issues

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Fannie Mae and Freddie Mac guidelines are important to know and understand when helping a client that is facing divorce.  Check out the scenarios below to better understand how to help your client avoid title issues.

Scenario 1:

Divorcing borrower is not on title or the current mortgage and must pull equity out to give to ex.

Fannie Mae Guidelines:  Borrower must be on Title for 12 months.  Once on title for 12 months, borrower can do a rate and term equity buy-out refinance (not considered a cash-out).  If borrower is required to take ownership before 12 months, the transaction must be completed as a purchase if required to give ex-equity from the house. 

Freddie Mac Guidelines: Borrower is awarded the marital home and is not on title or the current mortgage.  Our Borrower will be required to be on title for 12 months, and after 12 months must be considered a cash-out, or it must be considered a purchase transaction. This is considered a special purpose cash-out.

Scenario 2:

Borrower is not on title or the loan and is not required to pull equity out to give ex-spouse.

Fannie Mae Guidelines: We can immediately add our borrower to the title and complete a rate and term refinance—no seasoning requirement for our borrower to be on the Title. Borrower can go on title prior to OR at closing.

Freddie Mac Guidelines:  Borrower must be on title for 12 months to meet Freddie’s Continuity of Obligation guidelines.  Borrower can do a rate and term once on title for 12 months.  No cash-out is allowed.

Contact Jan or CLICK HERE to schedule an appointment with me to learn more!


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