Endorsements: Form 2056 Instructions

Form Number/Name

Comt.

Owner’s

Loan

Const.

#2056: Homestead Subordination Endorsement

 

 

X

 

NOTES:

Coverage: This endorsement assures the lender that the lien of its mortgage has priority over the homestead rights of a non-titleholding spouse.

Procedure: This endorsement may be issued on Loan Policies only.

Illinois: This endorsement is for situations where the buyer is married and is taking title to property that will be the couple’s homestead, and signing a purchase money mortgage. Under Section 12-903 of Civil Procedure, a purchase money mortgage has priority over the homestead rights of the non-titleholding spouse. 735 ILCS 5/12-903. This means that the mortgage will take priority over the non-titleholding spouse’s homestead interest if all the proceeds of the loan are used to pay for the property or all the proceeds are used to improve an existing home. In these situations, the mortgage will take priority even without the non-titleholding spouse’s signature.

Verify the following:

1. The property is homestead property.

2. The buyer/borrower is married.

3. All the loan proceeds are used to purchase the land and for no other reason.

With proof of those facts in your title file, you may issue this endorsement to the Loan Policy.

Indiana: Indiana has no equivalent homestead law, so this endorsement is unnecessary.

Wisconsin: This endorsement is for situations where the buyer is married and is taking title to property that will be the couple’s homestead, and signing a purchase money mortgage. Under Wisconsin Statutes Section 706.02(1)(f), a purchase money mortgage has priority over the homestead signature requirement of the non-titleholding spouse. This means that the mortgage will take priority over the non-titleholding spouse’s homestead interest if all the proceeds of the loan are used to pay for the property. In this situation, the mortgage will take priority even without the non-titleholding spouse’s signature.

Verify the following:

1. The property is homestead property.

2. The buyer/borrower is married.

3. All the loan proceeds are used to purchase the land and for no other reason.

With proof of those facts in your title file, you may issue this endorsement to the Loan Policy.

Questions? Contact an Underwriter.