Don’t fret my friends here in Arizona. We don’t have a Redemption Period here in Arizona. I wanted to post this so you had the information in case you heard it reported in accurately some where else. If you have any questions about this or anything else, don’t hesitate to give me a call 480-502-7699
Jeff Cameron Realtor Scottsdale Arizona
Title Defect – Mortgage Loans Secured by Properties Subject to Unexpired Redemption Period
Certain state laws provide for a “redemption period” after a foreclosure or tax sale has occurred, during which time the prior owner may reclaim the property upon payment of all amounts owed. Unexpired redemption periods create an unacceptable title defect on the subject property, and do not conform to the existing policy that requires the property to have “good and marketable” title. As such, Fannie Mae is clarifying the Selling Guide to state that properties with unexpired redemption periods have unacceptable title defects. Therefore, these mortgage loans are not eligible for delivery to Fannie Mae until after the expiration of the redemption period. The purchase of additional insurance, a redemption bond or similar coverage during the redemption period does not remedy the title defect and the mortgage loan remains ineligible for delivery to Fannie Mae.
This topic was also updated to remove the paragraph pertaining to FHA and VA mortgage loans. Lenders must follow the applicable federal agency’s requirements pertaining to allowable title exceptions.
Updated Selling Guide Topic
B7-2-05, Title Exceptions and Defects (Title Defect – Mortgage Loans Secured by Properties with Unexpired Redemption Periods)
Effective Dates
This clarification is effective immediately.
480-652-2004