source:
  type: guide
  id: fnma-sel-b2-1.3-05
  authority: Fannie Mae Selling Guide B2-1.3-05 — Payoﬀ of Installment Land Contract
    Requirements
  description: Fannie Mae Selling Guide B2-1.3-05 — Payoﬀ of Installment Land Contract
    Requirements.
  coverage_tier: operative
obligations:
- id: fnma-sel-b2-1.3-05-full
  canonical_id: fnma-sel-b2-1.3-05-full
  section: Fannie Mae Selling Guide B2-1.3-05 — Payoﬀ of Installment Land Contract
    Requirements
  type: do
  tags:
  - regulator-direct
  - fnma
  - selling-guide
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: Fannie Mae Selling Guide B2-1.3-05 — Payoﬀ of Installment Land Contract
      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: B2-1.3-05, Payoﬀ of Installment Land Contract Requirements (12/11/2024)
      Introduction This topic contains requirements for the payoﬀ of installment land
      contracts. Payoﬀ of Installment Land Contract Requirements Payoﬀ of Installment
      Land Contract Requirements When the proceeds of a mortgage loan are used to
      pay oﬀ the outstanding balance on an installment land contract (also known as
      contract or bond for deed) that was executed within the 12 months preceding
      the date of the loan application, Fannie Mae will consider the mortgage loan
      to be a purchase money mortgage loan. The LTV ratio for the mortgage loan must
      be determined by dividing the new loan amount by the lesser of the total acquisition
      cost (deﬁned as the purchase price indicated in the land contract, plus any
      costs the purchaser incurs for rehabilitation, renovation, or energy conservation
      improvements) or the appraised value of the property at the time the new mortgage
      loan is closed. The expenditures included in the total acquisition cost must
      be fully documented by the borrower. When the installment land contract was
      executed more than 12 months before the date of the loan application, Fannie
      Mae will consider the loan to be a limited cash-out reﬁnance in accordance with
      B2-1.3-02, Limited Cash- Out Reﬁnance Transactions. In this case, the LTV ratio
      for the mortgage loan must be determined by dividing the new loan amount by
      the appraised value of the property at the time the new mortgage loan is closed.
      Cash-out reﬁnance transactions involving installment land contracts are not
      eligible for delivery. Published May 6, 2026 188 Recent Related Announcements
      The table below provides references to recently issued Announcements that are
      related to this topic. Announcements Issue Date Announcement SEL-2024-08 December
      11, 2024 Section B2-1.4, Loan Amortization Types
  judgment: false
