Addendum to loan application

1

Hello all,
I apologize if this has been discussed here before but I’ve been wondering why some loan packets contain an addendum to the loan application asking if the borrower (s) are in a civil or domestic partnership. What struck me as odd (besides the question itself) is that it immediately follows the demographic addendum, which borrowers have the choice not to provide the information. I found a forum discussing this addendum with someone giving the following opinion:

“My experience working for title companies and real estate attorneys leads me to believe that this additional page is needed in order to provide lenders coverage to insure that the bank has a valid first lien position on title.
Spouses and others on title, or, in a marital property state, those automatically having a claim to title by virtue of marriage, must properly document their agreement with any mortgage to be insured. That is normally achieved through proper signatures on the mortgage.
In the case of a civil union, or in a state where being in a registered civil union gives the same benefits as a marriage license, title companies have to make sure they are taking all the proper steps to provide the lender the coverage they are purchasing.
Therefore the need to know if someone else should be signing off on the mortgage can only be acquired by asking the applicant the question on the addendum.”

Is this really a plausible explanation?

2

Sure it’s plausible. Civil unions and domestic partnerships usually have the same legal effect as being married. In many states a spouse (or equivalent) has a claim to the spouse’s real estate, especially if it’s a homestead. So the title company has to know if there is a spouse, civil union partner, or domestic partner, or any other equivalent relationship that a state might have created.

3

It would make sense if they weren’t already listed as husband and wife in all of the paperwork and weren’t also signing an Affidavit of Continuous Marriage. Are they meaning a relationship outside of the marriage? I’m just thinking out loud, not questioning your response. As for the question itself, I was looking at it from an “alternative” viewpoint.