- April 27, 1993
- All Agents
- Homestead Exemption
In response to numerous recent inquiries, we have put together a statement of Stewart's interpretation on the homestead exemption together with some underwriting guidelines to avoid insuring an invalid mortgage as a result of exercise of the rights provided by the statute.
Background. MCLA 600.6023(h) provides for an exemption from execution by creditors of any person's homestead. It further provides that any mortgage on homestead property executed by only one spouse is invalid. There are two exceptions to this. It does not apply to mortgages given to secure all or part of the purchase price of homestead property and it does not apply to mortgages outstanding for twenty-five years.
Applicability. The statute applies where all three of the following factors exist:
The mortgage to be insured is not a purchase money mortgage;
The mortgage is secured by property constituting a homestead or intended to be a homestead by the parties. This is limited by statue to forty acres and a house on unplatted land or a single lot in a platted sub; and
The mortgagor is married (whether or not the property is jointly held).
Requirements. Therefore, our general requirement wherever a mortgagor is married and we are asked to insure the mortgage is to record the mortgage, properly executed by the mortgagor and spouse.
In order to remove this requirement on the basis that the mortgagor is single, the mortgage must state on its face that the borrower is single, i.e. Jane Doe, a single woman.
In order to remove this requirement if the mortgagor is not single, there are two options:
Require evidence from the lender that the property is commercial or vacant and the mortgagor and spouse have a different address as a residence from the property being used to secure the mortgage. An appraisal and loan application might provide such evidence or a simple letter from the lender.
Obtain an Affidavit from the nonsigning spouse stating that the property is not his or her homestead and that he or she has no intention of using it as such.
Hopefully the above will be useful to you in your examining and closing. As always, should you have any questions whatsoever, please do not hesitate to call us.
THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.