Lightning Docs Update

We have issued an update to the system that modified the following:

ALTA Endorsement Update

• After the 2021 Policy changes, “-06” is no longer being used after endorsement numbers.
• We also added ALTA 14 as a standard endorsement for Lightning Docs users.

Selene ACH Form Update

• We have updated the ACH form that populates when Selene Finance is the loan servicer to match Selene’s updated form.

Florida Balloon Notifications

• We have updated the Florida Mortgage balloon disclosure that appears in the Florida Mortgage. There are two versions of the balloon disclosure that will appear at the top of the mortgage and in the state specific provisions (Non-Uniform Covenants), at the end of the Mortgage, in accordance with the following:
– Option 1 will appear for interest only or partially amortizing loans with a fixed rate.
– Option 2 will appear for interest only or partially amortizing loans with a variable rate.
• Please note that for partially amortizing loans, you will be required to manually enter the anticipated balloon payment amount in both the notification below the title and in the disclosure in the state specific provisions (Non-Uniform Covenants) at the end of the mortgage.

New Coversheet for Washington Security Instrument

• In order to facilitate your loans secured by real property in Washington, we have added a cover sheet for the Deed of Trust and Assignment of Deed of Trust. Please note that there are two areas that will require entering the following additional information once the loan documents are produced in Word:

1. Page number to identify where the full legal description can be found.
2. The abbreviated legal description (we recommend obtaining this from title)

Lightning Docs Update

1. Junior Mortgage in Illinois:
   • Added “This Note is Secured by a Junior Mortgage” to the top of Secured Note, for Junior Lien transactions in the state of Illinois.
2. Moved TN Maximum Indebtedness Notice:
   • The required statement of Maximum Principal Indebtedness on the Security Instrument (both original, and modification) needed to move from its current spot (on the right side above the margin break), to below the margin break on the left side, but immediately above the name of the security instrument.
3. Modified ACH Form:
   • We have altered the language, slightly, to better conform to the language style in loan docs.
4. Added Non Sufficient Funds Limitation to ACH Form:
   • We have added qualifier to standard ACH form to ensure NSF fee complies with applicable state law.

Community Property Issues Related to Guarantees

Whether a married spouse can bind the community property of both spouses with just their signature is controlled by the law of the state in which the spouses reside. In Alaska, Arizona, Idaho, Louisiana, Nevada, New Mexico, Washington, and Wisconsin, the community property laws of each state require that the spouse of the guarantor must CONSENT to the other spouse’s guaranty to bind the community property of both spouses. In the remainder of the community property states a single spouse can bind the community property of both spouses. 

Our previous coding logic looked to the state in which the collateral real property was located to determine whether spousal consent was necessary for the guaranty since, for most transactions, the guarantor resided in the state where the real property was located. More precise coding requires an understanding of the state of residency of the guarantor and their spouse to provide a much more definitive determination of which state’s community property rules should apply.

We implemented these changes in our most recent update to the Lightning Docs server. Specifically, in the interview dialogue, you will see new questions as they relate to the Guarantor:

Here you will need to identify if both (a) the Guarantor is married, and (b) they or their spouse are a resident of the states mentioned above. If the answer is No, or Not Applicable then no spousal consent will populate in the Loan Documents. If the answer is “Yes” then a spousal consent will populate. 
A spousal consent does not make the consenting party an additional Guarantor to the Guaranty. Instead, it only acknowledges the non-guarantor spouse’s consent to bind the entire community property estate of both spouses.

For example, John Smith and Jane Smith are married, residents of Arizona and only Jane Smith signs a Guaranty to which John Smith consents, if the loan defaults, the lender can file a breach of guaranty action only against Jane Smith. However, if a judgment is obtained against Jane Smith, all of (a) Jane Smith’s personal property assets, and (b) Jane and John Smith’s community property assets would be subject to judgment since John Smith consented to the Guaranty. The lender would have no recourse against John Smith’s personal property assets.  If John Smith did not consent to the Guaranty, then the lender would only have recourse against Jane Smith’s personal property assets and ½ of the community property assets held by Jane and John Smith.

For any questions about this update, please connect with our team at Lightning Docs by sending an e-mail to team@lightningdocs.com.

Lightning Docs System Updates

1. We have updated the closing instructions to clarify closing requirements.
2. Added a Borrower representation in the Loan Agreement re: Title to Property.
3. For loans being assigned to Saluda Grade, we updated their address to conform to the one provided by Saluda Grade.