Hope everyone is enjoying the summer and had a great 4th. I have 2 issues I wanted to briefly discuss. The first is a very common question which causes much confusion, unnecessary worry and inconvenience. It involves the scenario where 2 individuals or spouses are purchasing property and obtaining a mortgage. The problems is that one spouse has bad credit or otherwise does not qualify for the loan so is not allowed to be a borrower on the lender’s documents. The question, of course, then becomes, “Who can be on title?”, “Who has to sign the Deed of Trust?” etc, etc.
Here’s the rule (subject of course to individual mortgage lender’s underwriting polices which could change things a bit). Every buyer that is on the conveyance deed signed by the seller must sign the lender’s Deed of Trust, even if one is not the borrower. So, if 2 people take title together with only one being the borrower what could be the result if only the “borrower” signs the Deed of Trust? The result is the Deed of Trust is not good. If the 2 buyers are single, and only the “borrower” signs the Deed of Trust, the lender only has a lien on 1/2 the title. If the 2 buyers are married to each other, and only the borrowing spouse signs the Deed of Trust, it is much worse. In that instance, the Deed of Trust fails completely, as I hope we all remember, a conveyance by one spouse of property held jointly with the other spouse, as my grandfather was fond of saying, “Ain’t worth nothin’”.
If on the other hand, only the borrower takes title, then a non-title, non-borrowing spouse can still sign the Deed of Trust (which does not make him or her liable on the loan, by the way because it is the Note that creates the obligation to pay the money back, not the Deed of Trust). Or, the spouse could sign an Assent to Execution of Deeds and Waiver of Marital Rights, although this document is out of favor today with many lenders.
Finally, at Investors Title Company we talk often about “mentoring” new employees. The title business is not everyone’s “cup of tea” as I like to say. It’s very stressful, customer oriented, and can be difficult to learn or grasp. As a result, as we and everyone in the title and real estate industry hire new people, it’s not enough to just “show” them what to do. Someone, (and I can’t recall who so they won’t get any credit, I just know I didn’t make it up), once said “Tell me and I forget, teach me and I may remember, involve me and I learn”, or something to that effect. Anyway, the key thing is involvement. When I first started at Investors Title Company and really had no idea what a title company’s place in the universe was, the owner of the company took me with him to various meetings that he had from time to time as well as to some of our branches to talk with closers or other employees. It wasn’t until much later in my career that I understood the reason that he did this. He didn’t need me to go with him. He could clearly handle things on his own. He was “involving” me in the business. He wasn’t just telling me to do this or that. He was making me a part of the company so that I could really learn the business and not just become proficient at whatever tasks I was required to perform. I think that’s a good lesson to reflect on from time to time given that we all transition from “mentoree” to mentor at some point in our career.
Have a great month.
Joe