One of the many questions that I’ve come across during my time as a loan signing agent is “Why do I have to sign the documents if I’m not on the loan?” In this post we will:
- Define a few key terms.
- List and define documents that may require signature at the closing.
- Discuss the answer to this question.
Sections
Documents that may require signing
Borrower
The borrower is the person who is taking out the loan for the property. The loan officer takes the borrower’s information during the loan application. Or, in recent times lenders make it easy for their customers to apply for a loan online. Then, the loan officer runs the borrower’s credit to qualify them for a loan. The loan office may require you to submit paperwork (multiple times), sign paperwork (multiple times), and perform home inspections. A lot happens between the time that the loan is approved and when the closing is completed.
These aren’t the exact steps, but you get my drift. Since the borrower is the person borrowing the money from the bank, she/he must sign the promissory note, AKA the Note.
The-None-Borrower
The non-borrower is the person that is not applying for the loan. Their information is not included in the application so they are not required to sign the Note. The non-borrower can be a spouse, a domestic partner, or in a civil union with the person taking out the loan.
Documents that may require signing.
Regardless of if the non-borrowing spouse/partner’s name appears on the title to the property, they may be required to sign one or more of the following documents:
- Deed of Trust or Mortgage (and all attached riders). The mortgage is the lender’s security interest in the property.
- Signature Name Affidavits. These documents list variations of the borrower’s name that were used to obtain credit. The names may be the same or different than what is printed on the loan documents.
- Truth-in Lending Disclosures. This document is merged into the closing disclosure (CD) statement. It includes things like the annual percentage rate (APR), finance charge amount, and total of payments.
- A Notice of Right to Cancel (for rescindable loan transactions). The borrower’s notice that they have the right to cancel the transaction within a specific time frame. (Does not apply to certain types of loan or properties. Consult your loan office for more on this).
The Answer
So, does the non-borrowing spouse/partner still have to sign at the closing? The answer to this question depends on the laws of your state regarding homestead property.
In Florida a spouse/partner must sign the mortgage even if that person is not on the loan. Signing the mortgage does not obligate them to repay the debt. This is because the only person required to sign the Note (promise to pay) is the person receiving the loan (borrower). What it does mean is that the non-borrowing spouse/partner’s interest in the property can be lost to foreclosure if the borrower defaults on the loan.
Title XL FLA. Stat. § 709.2201 2(b) of the Florida statutes primary addresses powers of attorney and similar instruments for real and personal property. But, it mentions the joinder of spouse requirement that also applies to mortgaging a property as a married person in the state.
Conclusion
If you are unsure which documents require signatures from your non-borrowing spouse/partner, consult with your loan officer.
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*I am not an attorney therefore the information in my posts is not legal advice.
