Land Release and Mortgage Paydown

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Releasing part of mortgaged land can require a principal payment. Fannie Mae’s partial-release policy uses the higher of the prior loan-to-value ratio or 60% when its applicable post-release ratio is at least 60%.

Fictional Fannie Mae mortgage, excluding Texas Section 50(a)(6): assume the servicer confirms all other applicable conditions. Debt is $350,000 and property value $500,000, giving a 70% loan-to-value ratio.

The retained property would be worth $400,000 after release. With unchanged debt, its ratio would be 87.5%. The relevant target is 70%, not 60%.

Debt at that target is 70% × $400,000 = $280,000. The modeled paydown is $350,000 − $280,000 = $70,000.

If sale proceeds provide $60,000 available for that payment, another $10,000 is needed. Assume no additional costs or adjustments. Sale proceeds and the retained property’s valuation are separate inputs.

Confirm with the servicer the valuation, required payment and release documentation before relying on proceeds. Meeting this numerical test alone does not approve a release or determine your new installment.