Compliance News: “Limited Purpose Execution” Language in Security Instruments

Fannie Mae recently announced:

The instructions for all security instruments (excluding Puerto Rico) have been updated. This update only revised the “Limited Purpose Execution” Authorized Change language. This Authorized Change remains optional for use.

The Fannie Mae “Limited Purpose Execution” instruction now reads:

[12.] Lenders MAY, when appropriate, add an asterisk (*) following the Borrower’s name on the first page of the security instrument and following the Borrower’s signature at the execution block of the security instrument, with the asterisk tying to a legend added immediately following the execution block. The legend should read substantially as follows:

*___________________ signs as Borrower solely for the purpose of complying with Applicable Law requiring a spouse’s signature to create a valid lien or to expressly waive any spousal rights to the Property, or both, without assuming personal liability for payment of any sums secured by this Security Instrument.

Freddie Mac also recently announced:

We have updated Exhibit 5A, Authorized Changes to Notes, Riders, Security Instruments and the Uniform Residential Loan Application, to revise the Limited Purpose Execution authorized changes language for use in all Security Instruments and to remove the Limited Purpose Execution authorized changes language for the Illinois Mortgage and Wisconsin Mortgage Security Instruments.

The Freddie Mac “Limited Purpose Execution” instruction now reads:

Where appropriate, an asterisk may be added following the Borrower’s name where the name appears on the first page of the Security Instrument and following the Borrower’s signature at the execution block of the Security Instrument, with the asterisk tying to a legend added immediately following the execution block of the Security Instrument. The legend should read substantially as follows:

___________________ signs as Borrower solely for the purpose of complying with Applicable Law requiring a spouse’s signature to create a valid lien or to expressly waive any spousal rights to Property, or both, without personal liability for payment of any sums secured by this Security Instrument.

Clients who would like to add “Limited Purpose Execution” language after Borrower signature lines can manually insert the “Limited Purpose Execution” language by using the following fields:

Field 55421     NPE 1 Optional Verbiage to Add to End of Security Instrument Signature

Field 55422     NPE 2 Optional Verbiage to Add to End of Security Instrument Signature

Field 55423     NPE 3 Optional Verbiage to Add to End of Security Instrument Signature

Field 55424     NPE 4 Optional Verbiage to Add to End of Security Instrument Signature

If you have any questions or concerns, please contact Client Support at 1.800.497.3584.

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The preceding is for informational purposes only and is not and may not be construed as legal advice. No third-party entity may rely upon anything contained herein when making legal and/or other determinations regarding its practices, and such third-party should consult with an attorney prior to embarking upon any specific course of action.