FHA Single Family Lender’s Guide 4155.2, ch. 6.B.2.a requires lenders to use the FHA “Model Mortgage Form,” in accordance to the instructions set forth in Ibid. ch.12.A.2, for FHA-insured mortgages. Subsection (b) of the instructions, which provides for modifying the language that precedes the uniform covenants in the “Model Mortgage Form,” states the following (in relevant part):
“The lender should use FNMA/FHLMC language . . . The form may include variations to the standard language that have been approved by FNMA/FHLMC.”
Variations that have been approved by FNMA are set forth in the instructions for each FNMA security instrument (see https://www.efanniemae.com/sf/formsdocs/documents/secinstruments/). The fifth item in the instructions for Minnesota’s security instrument provides for the following optional change:
“Lenders MAY add the words ‘Purchase Money’ in front of or above the caption ‘Mortgage’, if all, or any portion of the loan proceeds are to be used to purchase the security property.” (emphasis in the original)
Although this caption is not required by Minnesota law and is only an optional change, several title companies have required it to appear on all Minnesota-based security instruments. DocuTech has been providing this caption for Minnesota FNMA purchase-money security instruments, but will now begin providing it for similar Minnesota FHA instruments, under the same conditions.
This change will take effect on March 31, 2012. If any clients would like to prohibit this caption from printing on either their FNMA or FHA instruments (or both), they are encouraged to contact their Account Manager. If you have any questions or concerns about this change, please contact Client Support at 1.800.497.3584
March 26, 2012