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Updated over 8 years ago on . Most recent reply

FNMA Loans and Code Enforcement Liens
Alright, I need some expert input from those of you who work with Fannie and Freddie underwriting guidelines for a living.
What are the rules for originating a loan on a property that has a code compliance lien on it? Assume that the lien has no monetary penalties applied (but, of course, there's a threat of fines).
Are there hand and fast rules? Left up for interpretation? How do you approach these things?
I have a feeling @Jerry Padilla may have experience here.
Most Popular Reply

@Justin R. Underwriting will not pass with any form of lien on the property which will not be cleared at closing. Also, a title company will not issue title insurance for the lender or the buyer. So its a dead deal.
Your options are:
* Get the seller to fix the issues and clear the lien
* Buy using rehab loan - FHA 203(k) if owner occupy, or Fannie HomeStyle if investment 1-unit
* Buy with HML/PML, fix the issues, clear the lien and then refi into a standard Fannie/Freddie loan