(this has been around for awhile)
Purchase transactions can be made difficult when the borrower retains or plans to sell their departing residence, but will not be rented or sold prior to closing.
For this reason, Fannie Mae provides an opportunity to omit the liability from the vacated property, as outlined below:
If the borrower’s current principal residence is pending sale, but the transaction will not close with title transfer to the new owner prior to the subject transaction, and the borrower is purchasing a new principal residence, the current PITIA and the proposed PITIA must be used in qualifying the borrower for the new mortgage loan…
However, Fannie Mae will not require the current principal residence’s PITIA to be used in qualifying the borrower as long as the following documentation is provided:
- the executed sales contract for the current residence, and
- confirmation that any financing contingencies have been cleared.
Hopefully, when you really need a purchase to close and can’t due to the PITIA debt on their current residence in escrow, and they don’t have to have that cash to close, or can creatively get it (legally, and per guidelines 🙂 somewhere else, then this option foots the bill!
Have a great weekend!
Don