NEW Community-Owned or Privately Maintained Streets FNMA Requirements

In our ever-tightening environment appraisers are doing their research more carefully and lenders are finding that many streets thought to be publicly maintained are actually private roads.  This triggers an underwriting requirement to provide the recorded road maintenance agreement---which often does not exist.

If the property is not situated on a publicly dedicated and maintained street, then it must be situated on a street that is community owned and maintained or privately owned and maintained. There must be adequate vehicular access and there must be an adequate and legally enforceable agreement for vehicular access and maintenance.  

 

Community-Owned or Privately Maintained Streets

If the property is located on a community-owned or privately-owned and maintained street, an adequate, legally enforceable agreement or covenant for maintenance of the street is required. The agreement or covenant should include the following provisions and be recorded in the land records of the appropriate jurisdiction:

•	responsibility for payment of repairs, including each party’s representative share,

•	default remedies in the event a party to the agreement or covenant fails to comply with his or her obligations, and

•	The effective term of the agreement or covenant, which in most cases should be perpetual and binding on any future owners.

Note: If the property is located within a state that has statutory provisions that define the responsibilities of property owners for the maintenance and repair of a private street, no separate agreement or covenant is required.

If the property is not located in a state that imposes statutory requirements for maintenance, and either there is no agreement or covenant for maintenance of the street, or an agreement or covenant exists but does not meet the requirements listed above, the lender must indemnify Fannie Mae for any losses or expenses it may incur due to the physical condition of the street or in order to establish and/or retain access thereto.