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Fannie Mae Guideline Change For Properties On A Private Road

Reblogger Tom Bailey
Real Estate Agent with Margaret Rudd & Associates Inc.

This blog by George Souto is about a change to Fannie Mae rules that is good news for a lot of homeowners. It is really good news for us in Carteret County as we have lots of private roads and shared driveways. Thanks George.

Original content by George Souto NMLS #65149

Fannie Mae Guideline Change For Properties On A Private Road.  I wrote a blog on Thursday, August 6th titled "Underwriters Do Have A Sense Of Humor" in which I blogged about a question I asked my Underwriter and the response I received.  The question was on the Fannie Mae Guideline For Properties On A Private Road.  I knew that Fannie Mae required a Private Road Maintenance Agreement for properties on private roads, but I could not locate the guideline in the Fannie Mae MRI Book.  

Those who read that blog might recall the Underwriter responded back to me with a link to a blog I had written a couple of years ago on the same topic.  The blog was about a Borrower who was doing a Fannie Mae Conventional Mortgage and putting 20% down.  Fannie Mae guidelines required a maintenance agreement for private roads, which meant a maintenance road agreement needed to be in place or a new one drawn up and signed by all property owners on the private road.  An maintenance road agreement was not in place, so one was drawn up, and all the neighbors on the road agreed to sign it except one.  After many attempt of trying to convince this homeowner it was in his best interest to have a Road Maintenance Agreement in place the deal fell apart.

The existing Fannie Mae Guideline Section 904.03 Stated:

A Community-Owned or Privately Maintained Street must be recorded on the land records for the municipality that the property is located in, and should include the following provisions: 

  • Each homeowners responsibility for the road and monetary share of repairs and maintenance.
  • A remedy in case of default, or failure to comply by one of the homeowners
  • The effective term of the agreement.  In most agreements the term is perpetual and binding on all future owners.

Well it seems this will no longer be an issue in the future on Fannie Mae Loans.  Fannie Mae has recently decided to change their present guideline for properties on a private road as of October 1, 2014 to not requiring a private road maintenance agreement in the future. 

As of October 1, 2014 the Fannie Mae Guideline for private roads will change as a result of House Bill Number 5219, Public Act Number 14-67 "An Act Concerning Maintenance Of Private Easements And Rights-Of-Way.  The new Fannie Mae Guideline for private roads will now read much more like the FHA Guideline for properties on private roads which do not have a "Maintenance Road Agreement", FHA only requires there be a Permanent Easement Agreement in place.

The new Fannie Mae Guideline for properties on a private road will be changed on October 1, 2014 to read in accordance to House Bill Number 5219, Public Act Number 14-67 "An Act Concerning Maintenance Of Private Easements And Rights-Of-Way which states impart:

Section 1 "(b) The owner of an residential real property that benefits from an easement or right-of-way, the purpose of which is to provide access to maintaining such easement or right-of-way in good repair and the cost of repairing or restoring any damaged portion of such easement or right-of-way.  Such maintenance shall include, but not be limited to, the removal of snow and such easement or right-of-way.

(c) If more than one residential real property benefits from such easement or right-of-way, the cost of maintaining and repairing or restoring such easement or right-of-way shall be shared by each owner of a benefited property, pursuant to the terms of any enforceable written agreement entered into for such purpose.  In the absence of such agreement, the cost of maintaining and repairing, or restoring such easement or right-of-way shall be shared by each owner of a benefited property in proportion to  the benefit received by each such property."

NOTE:  The same guideline applies to Shared Driveways.

This Fannie Mae Guideline Change For Properties On A Private Road may not be as important in some parts of the country as it is here in Connecticut.  But this is good news here in Connecticut, because we have many rural areas with properties on Private Roads and Shared Driveways.  This guideline change will make obtaining financing for these properties much easier since a signed Maintenance Road Agreement by all homeowners on a private road will no longer be required.  Finally there is a Lending Guideline change which makes obtaining financing easier, in stead of the trend for several years now of making financing more and more difficult to obtain.



 Info about the author:

George Souto NMLS# 65149 is a Loan Originator who can assist you with all your #FHA, #CHFA, and #Conventional #mortgage needs in Connecticut. George resides in Middlesex County which includes #Middletown, #Middlefield, #Durham, #Cromwell, #Portland, #Higganum, #Haddam, #East Haddam, #Moodus, #Chester, #Deep River, and #Essex. George can be contacted at (860) 573-1308 or gsouto@mccuemortgage.com

David Shamansky
US Mortgages - David Shamansky - Highlands Ranch, CO
Creative, Aggressive & 560 FICO - OK, Colorado Mtg

I am hoping there can be even more rules and guidelines to give directives as I dont think we have enough to keep track of right now!?!?!?!?!

Oct 10, 2014 01:53 PM
Winston Heverly
Coldwell Banker Access Realty - South Macon, GA

Tom,  a nice read today, just packed with great and useful  information.

Oct 10, 2014 02:52 PM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Tom thank you for the re-blog, and glad you found the information useful.

Oct 11, 2014 12:06 PM
Robert Bob Gilbert
Berkshire Hathaway HomeServices Anderson Properties - Katy, TX
Your Katy TX ( West of Houston) Real Estate Expert

Tom, Thanks for the re-blog as this is very good information to be aware of and guide buyers when appropriate. 

Oct 15, 2014 03:50 AM
Barbara-Jo Roberts Berberi, MA, PSA, TRC - Greater Clearwater Florida Residential Real Estate Professional
Charles Rutenberg Realty - Clearwater, FL
Palm Harbor, Dunedin, Clearwater, Safety Harbor

In all my years in this business, I have yet to write a Fannie Mae offer. My daughter, less than one year in the business, just wrote her first.

Oct 31, 2014 06:58 AM
Roy Kelley
Retired - Gaithersburg, MD

I was looking for your current blogs. I hope all is going well for you.

Jan 29, 2015 07:33 AM
Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

Tom, just read your comment on Alan May's post.  I'd love to see you write your own posts.  Doesn't really matter what it's about.

Mar 29, 2015 12:11 PM
Jim Crawford
Long & Foster - Fredericksburg, VA
Jim Crawford Broker Associate Fredericksburg VA

Tom Bailey thank you for sharing this is most informative!

Aug 11, 2015 01:48 AM
Kate Elim
Dockside Realty - Spotsylvania, VA
Realtor 540-226-1964, Selling Homes & Land a

Hi Tom...This is not new news but it is new to me so thank you for reblogging. We have a few private roads and shared driveways around my area so this is something I really should have been aware of. Certainly better late than never.


Aug 12, 2015 12:35 PM