Selling Guide

Published June 02, 2021

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B8-3-03, Signature Requirements for Notes (10/31/2017)

Introduction

This topic contains information on borrowers’ signatures on notes, including:

 

Borrowers’ Signatures on Notes

An individual whose credit is used in qualifying for the loan must sign the note.

  • An individual whose credit was not used in qualifying for the loan, but who does have an ownership interest in the property must be named in and sign the security instrument, but is not required to sign the note.

  • An individual who is a co-signer or guarantor and who does not have an ownership interest in the property must sign the note, but is not named in (or required to sign) the security instrument.

  • When an inter vivos revocable trust is permitted by B2-2-05, Inter Vivos Revocable Trusts as a mortgagor, and no individual borrower has an ownership interest in the property (either on title or by operation of law), the trust must execute the note, but may do so without recourse for the exclusive purpose of subjecting its interest in the property to the lien of the mortgage. See B8-5-02, Inter Vivos Revocable Trust Mortgage Documentation and Signature Requirements for more information about the documentation requirements for mortgages granted by inter vivos revocable trusts, including appropriate forms of signature for the note.

A borrower’s signature should not contradict the name typed below the signature line on the note. Slight variations are acceptable—a missing initial, the omission of a “Jr” or “Sr,” or an over- or under-signing (such as a borrower signing as William Thomas Smith when the typed name is William T. Smith, or vice versa). Significant variations—such as William Smith signing as “Skip” Smith, signing with an “X,” or signing under an “also known as” name—are not acceptable unless the lender obtains a name affidavit from the borrower stating that he or she commonly uses the alternative signature.

 

Signature Requirements: Powers of Attorney and Guardianship

The following persons also may be eligible to sign the note on a borrower’s behalf in accordance with the guidelines below.

  • An attorney-in-fact may sign the note. See B8-5-05, Requirements for Use of a Power of Attorney, for further requirements governing the use of a power of attorney.

  • A court-appointed guardian may sign the note if the borrower is not legally competent, provided that he or she has unlimited power over the ward’s affairs, including the power to hold, convey, and give a lien against real property owned by the ward, to make payments from the ward’s assets, and to permit inquiries concerning the ward’s credit. The lender should obtain a copy of the documents making the appointment. If the guardian in some other capacity is a party to the loan or sale transaction—for example, the seller of the property—the lender should ascertain that there are no material conflicts of interest.

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