MPF Xtra Selling Guide Updates-Private Transfer Fee Covenants
Effective Date: Immediately (unless otherwise noted)
Pursuant to Lender Letter LL-2023-02, which covers the topic below applicable to loans sold under the MPF Xtra product.
Requirements have been updated for shared equity programs, specifically community land trusts and other properties with income and resale price restrictions. Shared equity loans are only eligible for sale to MPF Xtra upon the following conditions, which include certain additional Duty to Serve-related conditions:
- The entity entitled to enforce the private transfer fee covenant must be an eligible Community Seconds provider, and
- The instrument containing the private transfer fee covenant must:
- include restrictions on the terms of transfer of the subject property limiting both the maximum income of the transferee(s) and the maximum permissible sales price that will apply for at least 30 years after recordation (“Income and Resale Price Restrictions”);
- provide that the entity entitled to enforce the private transfer fee covenant has:
- a preemptive option to purchase the subject property from the homeowner at resale; and
- the power to review and approve all refinance loans and home equity lines of credit to be secured by the property.
Effective Date: The new policy for shared equity loans subject to private transfer fee covenants is effective for all such loans with note dates on or after July 1, 2023.
To gain a full understanding of these topics, PFIs should review the entire Fannie Mae Announcement and any applicable Fannie Mae Selling Guide chapters, forms, or exhibits noted in the announcements.
- MPF Announcement 2023-17