source:
  type: guide
  id: fnma-sel-b5-5.3-02
  authority: 'Fannie Mae Selling Guide B5-5.3-02 — Shared Equity Transactions: General
    Requirements'
  description: 'Fannie Mae Selling Guide B5-5.3-02 — Shared Equity Transactions: General
    Requirements.'
  coverage_tier: operative
obligations:
- id: fnma-sel-b5-5.3-02-full
  canonical_id: fnma-sel-b5-5.3-02-full
  section: 'Fannie Mae Selling Guide B5-5.3-02 — Shared Equity Transactions: General
    Requirements'
  type: do
  tags:
  - regulator-direct
  - fnma
  - selling-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: 'Fannie Mae Selling Guide B5-5.3-02 — Shared Equity Transactions: General
      Requirements'
    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: 'B5-5.3-02, Shared Equity Transactions: General Requirements
      (02/05/2025) Introduction This topic contains information on shared equity transactions,
      including: General Requirements Rights to Insurance Settlements and Condemnation
      Proceeds Notiﬁcation to Third Parties Published May 6, 2026 782 General Requirements
      The following table describes general requirements for shared equity transactions.
      Criteria Community Land Trusts Income and Resale Price Restrictions Required
      legal documentation The lender must review the community land trust''s ground
      lease to conﬁrm that it is based upon either the Grounded Solutions Network
      2011 CLT Network Model Ground Lease or the Institute for Community Economics
      (ICE) Model Ground Lease, both of which are available on the Grounded Solutions
      Network website. If the program is listed on the Certiﬁed Shared Equity Program
      List, the form of ground lease is acceptable to Fannie Mae without further review
      even if the ground lease is not based on either of these models. If the ground
      lease is not based on either of these models and is not included on the list,
      the lender may recommend the community land trust program apply for certiﬁcation
      through the Fannie Mae Shared Equity Program Platform. Any additional terms
      added to these model ground leases, other than those required by applicable
      law, may not override the rights of the consumer provided under the model ground
      leases. The lender must review the resale restrictions to conﬁrm compliance
      with this topic. The terms of the resale restrictions can be found in an existing
      recorded legal agreement or in the legal documentation to be recorded in connection
      with the borrower''s purchase of the property. Examples of such legal agreements:
      • The Grounded Solutions Network 2021 Model Declaration of Aﬀordability Covenants
      with Reﬁnance and Resale Restriction and Purchase Option, which is available
      on the Grounded Solutions Network website. Loans using this agreement must be
      delivered with SFC 177. • A declaration of covenants, often referred to as a
      deed restriction or deed-restricted covenant. • Any other covenant or provision
      of an agreement or deed that is recorded against the land. • The terms and conditions
      of a subordinate mortgage that comply with Section B5-5.1, Community Seconds.
      Note: Certain requirements will not apply to shared equity transactions, such
      as those in B5-5.1-03, Community Seconds: Shared Appreciation Transactions .
      If the requirements for the Community Seconds loan, the ﬁrst mortgage, and the
      shared equity program are diﬀerent, the most restrictive requirements will apply.
      Resale restriction requirements The community land trust ground lease must include
      restrictions to limit future property buyers to those with speciﬁed income levels
      and limit the maximum sales price of the property. The resale restrictions in
      the ground lease must terminate automatically upon foreclosure (or the expiration
      of any applicable redemption period) of the leasehold mortgage, or acceptance
      of a deed-in-lieu for foreclosure. After any resale restrictions have been terminated,
      they may not be automatically reinstated for subsequent buyers of the property.
      The term of the estate created by the ground lease must extend for at least
      ﬁve years beyond the maturity date of the loan that is delivered to Fannie Mae.
      The resale restriction terms must limit future property buyers to those with
      speciﬁed income levels and limit the maximum sales price of the property. If
      the resale restrictions terminate automatically upon foreclosure (or the expiration
      of any applicable redemption period), or acceptance of a deed-in-lieu of foreclosure,
      the provider is not entitled to obtain any proceeds from future sale(s) or transfer(s)
      of the property after foreclosure or acceptance of a deed-in-lieu. After any
      resale restrictions have been terminated, they may not be automatically reinstated
      for subsequent buyers of the property. If the resale restrictions survive foreclosure
      or a deed-in-lieu of foreclosure, the provider is not entitled to obtain any
      proceeds from the initial sale or transfer of the property after foreclosure,
      or from the foreclosing mortgage holder who obtained the property at foreclosure
      or from a deed-in-lieu of foreclosure. Published May 6, 2026 783 Criteria Community
      Land Trusts Income and Resale Price Restrictions Additional requirements for
      properties subject to private transfer fees A shared equity loan with a note
      date on or after July 1, 2023, secured by a property subject to a private transfer
      fee covenant is eligible for sale to Fannie Mae provided that the private transfer
      fee covenant qualiﬁes as an "excepted transfer fee covenant" under 12 C.F.R.
      § 1228.1. Grounded Solutions Network publishes the 2011 National Community Land
      Trust Network (NCLTN) Model Ground Lease, the Institute for Community Economics
      (ICE) Model Ground Lease, and the 2021 Model Declaration of Aﬀordability Covenants
      with Reﬁnance and Resale Restriction and Purchase Option ("Model Forms"). These
      Model Forms contain provisions that, if included in the recorded instrument
      for the property, will satisfy the above requirement. Special Feature Codes
      Lenders must report SFC 181 when delivering shared equity loans with an excepted
      transfer fee covenant. Shared equity loans secured by properties without private
      transfer fee covenants are not subject to the above requirements. For more information
      on private transfer fee covenants, see Private Transfer Fee Covenants in B2-1.5-02,
      Loan Eligibility. Certiﬁed Shared Equity Program List Lenders may choose to
      use the Certiﬁed Shared Equity Program List as an alternative to conducting
      their own review of the above requirements. This ﬂexibility only applies to
      loans involving programs on the list that use one of the Model Forms (Shared
      Eq - Model Forms tab). These programs comply with the criteria for required
      legal documentation, resale restriction requirements, and additional requirements
      for properties subject to private transfer fees described above. Programs on
      the Shared Eq - Model Forms tab also meet eligible shared equity provider requirements
      in B5-5.3-03, Shared Equity Transactions: Eligibility, Underwriting and Collateral
      Requirements. When utilizing this ﬂexibility, lenders must review the ground
      lease or deed restricted legal agreement for the subject property to conﬁrm
      that it is associated with a program included on the Shared Eq - Model Forms
      tab, and the Model Form speciﬁed on the list is being used at the time of the
      transaction. Additionally, if the property is subject to a private transfer
      fee, the lender must verify that the term of the ground lease or deed restricted
      legal agreement will apply for at least 30 years after recordation. Note: Lenders
      are responsible for reviewing all other applicable Fannie Mae requirements and
      obtaining the pertinent information needed to complete their review. Lenders
      remain obligated for other representations and warranties including life of
      loan representations and warranties, such as clear title and ﬁrst lien enforceability.
      Special Feature Codes Lenders must report SFC 792 when delivering a loan in
      connection with a program on the list and report all other applicable SFCs required
      for shared equity transactions. Published May 6, 2026 784 Criteria Community
      Land Trusts Income and Resale Price Restrictions Required riders and amendments
      Lenders must ensure that any loan secured by a community land trust property
      and delivered to Fannie Mae is supported by the appropriate leasehold interest
      documents, including the community land trust ground lease and a Community Land
      Trust Ground Lease Rider. The rider must be executed by the borrower and the
      ground lessor and recorded along with the ground lease. The form • ensures that
      the ground lease is in conformity with Fannie Mae requirements for community
      land trust loans, and • removes the resale restrictions as well as any other
      restrictions that may be included in the ground lease that could aﬀect the value
      of the property. The land records for the subject property must include adoption
      of the terms and conditions that are incorporated in this ground lease rider.
      Fannie Mae''s written approval is required if the rider is modiﬁed or is not
      executed. No additional Fannie Mae forms are required. Rights to Insurance Settlements
      and Condemnation Proceeds Fannie Mae must have ﬁrst claim to insurance settlements
      and condemnation proceeds. Notiﬁcation to Third Parties The terms of the shared
      equity legal agreement (as modiﬁed by a Community Land Trust Ground Rider, if
      applicable) may require the servicer to notify an interested third party, such
      as the shared equity provider or its designee, when the borrower defaults on
      the loan or in the event of foreclosure. In this case, the servicer must ensure
      proper notiﬁcation is provided, as required by the terms of the legal agreement.
      Regardless of any third-party notiﬁcation requirements, the servicer is still
      responsible for adhering to Fannie Mae''s established timeframes for completing
      routine foreclosure. Any third-party notiﬁcations required in addition to the
      required statutory notiﬁcations must not impair the servicer''s ability to foreclose.
      Recent Related Announcements The table below provides references to recently
      issued Announcements that are related to this topic. Published May 6, 2026 785
      Announcements Issue Date Announcement SEL-2025-01 February 05, 2025 Announcement
      SEL-2024-04 June 05, 2024 Announcement SEL-2023-11 December 13, 2023 Announcement
      SEL-2023-04 May 03, 2023'
  judgment: false
