We have a couple secondary market investors who are requiring that a non-titled spouse sign the mortgage. They say this is because of NC homestead rules and at foreclosure not being allowed to foreclose on the whole property. Has anyone seen/heard anything related to this, or do you have any insights? Every other secondary investor does not want non-titled spouses signing the mortgage, so we are trying to figure out why two of them do, and why it is only an issue for loans in NC. Thanks for any help you can offer!

Quatro,

There are a few possibilities. The first question to ask is are these loans "purchase money" transactions or "refinance" transactions. A married person in NC can buy a property, have it titled in his/her name only, borrow funds to purchase the property and the spouse is not required to sign the mortgage or deed of trust. See NCGS 39-13.

Beyond that, it starts getting a little murky. Refinance loans, equity loans, construction loans, etc. are not treated the same as purchase money. As your two investors pointed out, a non-owner spouse may still have marital interests in the property. See NCGS 29-14.

Of course, to further muddy the waters, there may be a "free trader" agreement or a pre-nuptial agreement between the spouses.

I have also heard that property inherited by one spouse during the marriage does not require the joinder of the other spouse in order to convey or borrow against. But that may no longer be true.

Over the years, some of the North Carolina title insurance companies have written articles about spousal signatures, loans and security instruments. Statewide Title is a good source. You can browse their newsletters and search for key words.

MarkB

Quatro,

As a follow up, here are two such articles:

Investor's Title and Statewide Title.

MarkB

Thanks for the help, MarkB! That should set straight.

And I appreciate the heads up about title company newsletters!

Quatro,

This same question came up at my bank, and when researching the background again, found another article from Investors Title: Marital Estates in North Carolina .

MarkB