Local, Mortgage Business, Realtor Advice

Delaware Civil Unions Recognition and Mortgage Financing

The new Delaware Civil Union law has some effect on real estate transactions and mortgage financing.  The law was passed in April 2011 and is effective on January 1, 2012.  You should be prepared with facts and be in a position of knowledge to help your clients should these issues arise during a real estate transaction.  Of course, no one expects a real estate agent or mortgage loan officer to practice law by giving advice, but we can have facts at hand and stand ready to direct clients to the proper resources for a knowledgeable answer to any question.

Here is an FAQ and Press Release on the DE Civil Union law from Lambda Legal and Equality Delaware with some general information.  I’ll follow with an outline of the effects on mortgage applicants and applications.

Effective January 1, 2012, Delaware recognizes civil unions of residents of the same gender and extends the same rights, protections, benefits and responsibilities as opposite-sex couples who enter into marriage. In addition, Delaware will recognize as a civil union any legal union between two individuals of the same sex validly formed in another jurisdiction (whether termed a marriage, domestic partnership, or civil union).

The Delaware Civil Union applies to:
  • Delaware residents who enter into a valid civil union in Delaware
  • Delaware residents who entered into a valid union in another jurisdiction

Any applicant who has received a certificate of Civil Union prior to the closing of their loan application has the following rights:
  • The applicant must be treated as a married person and the same guidelines must be followed.
  • It must be determined whether a partner will be on the security instrument (mortgage), based upon the title company’s review of current title to determine whether the non-borrowing partner has an interest in the property.
  • Civil Union members must be listed on the same 1003 (the mortgage application form).
  • Civil Union members cannot be charged more for credit reports than married couples would customarily be charged.
  • Debts are considered joint, just as for married couples.
  • Proof of registry is not required, just as marriage certificates are not required.

The Federal Housing Administration (FHA) expects Delaware Civil Union Members to be treated in the same manner as married couples.

The Department of Veterans Affairs (VA) does not recognize the state statutes because the statute does not meet the federal definition of marriage, which says, “The term ‘spouse’ means a person of the opposite sex who is a wife or husband.” The applicants are to be treated as unmarried applicants on VA applications.

As you can see, not all agencies regulating the mortgage and real estate business are on the same page as of yet.  I hope this is helpful and please get in touch with me for any more information on the new law and mortgage financing.  Happy new year to everyone.
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