Title · Fannie Mae B7-2-05Title exceptions that can block a mortgage – and the ones Fannie Mae accepts

Fannie Mae will not buy a loan on a property with an unacceptable title impediment, particularly unpaid real estate taxes and survey exceptions; where surveys are not customary the lender provides an ALTA 9 endorsement, and where neither is customary the title policy must not have a survey exception. Minor impediments are acceptable if they do not materially affect marketability. The Selling Guide (updated October 7, 2026) lists them: public utility easements underground and covered, not under buildings; above-ground utility easements along property lines (or drainage along the rear line) extending no more than 12 feet and not interfering with buildings or use; mutual easements for shared driveways or party walls that future owners can use without restriction; restrictive covenants, cost, size or setback restrictions whose violation cannot forfeit title or create a lien and do not hurt value; encroachments of a foot or less onto a neighbor's land by eaves, overhangs or driveways, with at least ten feet between the buildings and that property line; encroachments onto neighbors' land that are only hedges or removable fences; oil, water or mineral rights customarily waived, if they do not alter the land's contour or impair its value; boundary differences between the appraisal and the records of up to 2% on the front line and 5% elsewhere; rights of lawful parties in possession for no more than two years and without a recorded right of first refusal; and minor description discrepancies covered by a survey and affirmative title insurance. A property still within a foreclosure or tax-sale redemption period is acceptable only in states where such sales are customary and with affirmative title coverage.