A completed Uniform Residential Loan Application (FNMA Form 1003) helps a loan originator to determine if a loan applicant has a spouse who has a concurrent ownership interest in the property that will be secured by the loan applied for, thus enabling the originator to determine who should sign the security instrument.However, FNMA Form 1003 limits this determination process to married couples and not to partners in a civil union who, under certain states’ laws, have the same marital property rights as married couples. Without knowing whether an applicant has a civil union partner, a lender could mistakenly secure a loan only with the applicant’s interest in the subject property, but not his partner’s, making it practically impossible for any holder of the security instrument to foreclose upon the property.
Due to this, DocuTech provides an “Addendum to Loan Application” which discloses to the borrower that parties to a civil union may have an interest in the subject property and asks the borrower to disclose whether someone other than himself has an interest in the property.
At the present time, the Addendum currently prints for the states of Connecticut, the District of Columbia, Illinois, New Hampshire, Nevada, and Oregon (with similar addendums printing for California, New Jersey, Washington, and Vermont), all of which have laws that extend certain marital property rights to civil unions. This year, Delaware, Hawaii and Rhode Island passed similar laws. Therefore, the Addendum will begin to print for loans in these states.
The text explaining civil union property rights in the Addendum for these three states will be, with minor differences, substantially as follows:
“[Name of the state] law extends to parties to a civil union lawfully entered into the same rights, protections and benefits, as are granted to married spouses. This may include a concurrent ownership in the subject property, including a tenancy by the entirety wherein no lien can be practically made and enforced against the subject property without both parties’ consent.”
The citations for these states’ new laws are: Del. Code Ann. tit. 13, §212(a); Haw. Rev. Stat. §572B-9; and R.I. Gen. Laws §15-3.1-6.
Please note that this Addendum is provided in states whose laws extend some marital rights to civil unions. This addendum is not necessary in states that have granted full marital rights to same sex couples (e.g. Iowa and New York). Such couples are considered spouses and would fill out FNMA Form 1003 the same as a married traditional couple.
The Addendum will print for Delaware, Hawaii and Rhode Island effective January 1, 2012.