source:
  type: guide
  id: fnma-sel-b3-6-06
  authority: Fannie Mae Selling Guide B3-6-06 — Qualifying Impact of Other Real Estate
    Owned
  description: Fannie Mae Selling Guide B3-6-06 — Qualifying Impact of Other Real
    Estate Owned.
  coverage_tier: operative
obligations:
- id: fnma-sel-b3-6-06-full
  canonical_id: fnma-sel-b3-6-06-full
  section: Fannie Mae Selling Guide B3-6-06 — Qualifying Impact of Other Real Estate
    Owned
  type: do
  tags:
  - regulator-direct
  - fnma
  - selling-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Selling Guide B3-6-06 — Qualifying Impact of Other Real
      Estate Owned
    source_class: fnma-guide
    source_url: https://singlefamily.fanniemae.com/media/document/pdf/selling-guide
    snapshot_id: 5f7b8b79da595d76
    fetched_at: '2026-05-25T14:09:57Z'
    content_hash: sha256:98cf85a02861bbe84914a0e339b327c8fc131869a8a573882007bbeea60c5701
    paragraph_quote: 'B3-6-06, Qualifying Impact of Other Real Estate Owned (06/30/2015)
      Introduction This topic describes the qualifying impact of other real estate
      owned, including: Qualifying Considerations Mortgage Assumption Property Settlement
      Buyout Current Principal Residence Pending Sale Qualifying Considerations When
      the borrower owns mortgaged real estate, the status of the property determines
      how the existing property''s PITIA must be considered in qualifying for the
      new mortgage transaction. If the mortgaged property owned by the borrower is
      an existing investment property or a current principal residence converting
      to investment use, the borrower must be qualiﬁed in accordance with, but not
      limited to, the policies in topics B3-3.8-01, Rental Income, B3-4.1-01, Minimum
      Reserve Requirements, and, if applicable B2-2-03, Multiple Financed Properties
      for the Same Borrower; an existing second home or a current principal residence
      converting to a second home, the PITIA of the second home must also be counted
      as part of the borrower''s recurring monthly debt obligations; or the borrower''s
      current principal residence that is pending sale but will not close (with title
      transfer to the new owner) prior to the subject transaction, the lender must
      comply with the policies in this topic. In conjunction with the policies in
      this topic, the lender must also comply with the policies in B2-2-03, Multiple
      Financed Properties for the Same Borrower, B3-3.8-01, Rental Income, and B3-4.1-01,
      Minimum Reserve Requirements, as applicable. Mortgage Assumption Published May
      6, 2026 512 When a borrower sells a mortgaged property and the property purchaser
      assumes the outstanding mortgage debt without a release of liability, the borrower
      has a contingent liability. The lender is not required to count this contingent
      liability (PITIA) as part of the borrower’s recurring monthly debt obligations
      if the lender veriﬁes that the property purchaser has at least a 12-month history
      of making regular, timely payments for the mortgage. The lender can document
      this by obtaining evidence of the transfer of ownership; a copy of the formal,
      executed assumption agreement; and a credit report indicating that consistent
      and timely payments were made for the assumed mortgage. If the lender cannot
      document timely payments during the most recent 12-month period, the applicable
      mortgage payment must be counted as part of the borrower’s recurring monthly
      debt obligations. Property Settlement Buyout When a borrower’s interest in a
      property is bought out by another co-owner of the property, as often happens
      in a divorce settlement, but the lender does not release the borrower from liability
      under the mortgage, the borrower has a contingent liability. If the lender obtains
      documentation to conﬁrm the transfer of title to the property, this liability
      does not have to be considered as part of the borrower’s recurring monthly debt
      obligations. Current Principal Residence Pending Sale If the borrower''s current
      principal residence is pending sale, but the transaction will not close with
      title transfer to the new owner prior to the subject transaction, and the borrower
      is purchasing a new principal residence, the current PITIA and the proposed
      PITIA must be used in qualifying the borrower for the new mortgage loan. However,
      Fannie Mae will not require the current principal residence''s PITIA to be used
      in qualifying the borrower as long as the following documentation is provided:
      the executed sales contract for the current residence, and conﬁrmation that
      any ﬁnancing contingencies have been cleared. Recent Related Announcements There
      are no recently issued Announcements related to this topic.'
  judgment: false
