source:
  type: guide
  id: fnma-sel-b8-5-04
  authority: Fannie Mae Selling Guide B8-5-04 — Sample Legal Documents
  description: Fannie Mae Selling Guide B8-5-04 — Sample Legal Documents.
  coverage_tier: operative
obligations:
- id: fnma-sel-b8-5-04-full
  canonical_id: fnma-sel-b8-5-04-full
  section: Fannie Mae Selling Guide B8-5-04 — Sample Legal Documents
  type: do
  tags:
  - regulator-direct
  - fnma
  - selling-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Selling Guide B8-5-04 — Sample Legal Documents
    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: 'B8-5-04, Sample Legal Documents (02/05/2025) Introduction This
      topic provides documentation requirements for the following: Subsidized Second
      Mortgages in Community Seconds Transactions Mortgages Secured by Property Located
      on Community Land Trusts Subsidized Second Mortgages in Community Seconds Transactions
      Fannie Mae has not developed legal documents for the second mortgage component
      of a Community Seconds transaction; rather, the subsidized second mortgage should
      be closed on documents developed or acquired by the subsidy provider. Second
      mortgage loans delivered to Fannie Mae must meet Fannie Mae requirements or
      have received prior approval on a negotiated basis. A lender’s review of the
      legal documents should concentrate on determining that the security instrument
      for the subsidized second mortgage—and any other covenants or restrictions on
      the borrower’s ability to sell the property or to use the land that the subsidy
      provider has recorded, or may later record against the property—are clearly
      subordinate to the ﬁrst mortgage lien. The legal documents also must set forth
      any and all conditions that constitute a default under the terms of the subsidized
      second mortgage. Conditions that Fannie Mae considers acceptable include the
      borrower’s: failure to make scheduled payments due on the mortgage; failure
      to occupy the property as a principal residence; misrepresentation of any condition
      required for obtaining the mortgage (such as whether the borrower satisﬁes any
      applicable income limitations); payoﬀ of the ﬁrst mortgage; reﬁnancing of the
      ﬁrst mortgage to cash out their equity in the property; selling or transferring
      the property to a party that is ineligible to receive the subsidy (although
      property transfers that are exempt from enforcement of due-on-sale provisions
      under federal law must be allowed even if the party acquiring the property is
      not eligible for the subsidy, subject to the party’s assumption of the borrower’s
      obligations); and voluntary termination of their employment (for any reason
      other than disability), if their employer is the subsidy provider. If other
      default provisions are included in the legal documents for the ﬁrst or second
      mortgage, the borrower Published May 6, 2026 909 and the subsidy provider must
      execute a rider to nullify or amend those provisions. See Section B5-5.1, Community
      Seconds, for more information. Mortgages Secured by Property Located on Community
      Land Trusts Mortgages secured by properties located on a community land trust
      are subject to a ground lease, which includes provisions that require the continued
      use of the property for low- and moderate-income families, and limits the maximum
      sales price of the property. For such loans, Fannie Mae requires the lessor
      and the borrower to execute a Community Land Trust Ground Lease Rider. The purpose
      of the rider is to ensure the ground lease conforms to Fannie Mae’s guidelines
      for community land trust loans without the delay that would result from the
      lender’s obtaining Fannie Mae’s approval of each ground lease. Fannie Mae’s
      approval is required, however, if the rider is modiﬁed or is not executed. See
      B5-5.3-02, Shared Equity Transactions: General Requirements , for more information.
      Recent Related Announcements The table below provides references to recently
      issued Announcements that are related to this topic. Announcements Issue Date
      Announcement SEL-2025-01 February 05, 2025'
  judgment: false
