Understanding Texas Promulgated Forms for Texas Fannie Mae/Freddie Mac Uniform Instrument –SLG

By Regina Uhl, Partner, and Marshall Mahurin, Director of Compliance & Quality Assurance, June 30, 2020

Occasionally we have seen investors or lenders place conditions on loans to be purchased, specifically requesting to mark sub-section (H) “Riders” of the Texas single-family Fannie Mae/Freddie Mac Uniform Instrument, Form 3044, Deed of Trust, to indicate that a Renewal and Extension document has been attached as a rider.

It may be based on a misunderstanding that anything attached to a security instrument should be indicated as a rider. In this article we will discuss the drafting of the Texas promulgated forms and why the document to be used is an exhibit, not a rider.

Fannie Mae and Freddie Mac actually have been very clear that the Renewal and Extension document is an exhibit to the Deed of Trust. They have specifically addressed the attachment of a Renewal and Extension Exhibit in paragraph 27 of the promulgated Deed of Trust form.

27. Purchase Money; Owelty of Partition; Renewal and Extension of Liens Against Homestead Property; Acknowledgment of Cash Advanced Against Non-Homestead Property. Check box as applicable:
Renewal and Extension of Liens Against Homestead Property.
The Note is in renewal and extension, but not in extinguishment, of the indebtedness described on the attached Renewal and Extension Exhibit which is incorporated by reference. Lender is expressly subrogated to all rights, liens and remedies securing the original holder of a note evidencing Borrower’s indebtedness and the original liens securing the indebtedness are renewed and extended to the date of maturity of the Note in renewal and extension of the indebtedness. (emphasis added)

It seems unlikely that Fannie Mae and Freddie Mac would require a Renewal and Extension Exhibit to be marked as an attached rider when clear provisions for indicating its attachment as an exhibit have been made in the promulgated Texas Deed of Trust as noted in the above excerpt. Since the Form 3044 Deed of Trust is drafted as state specific for Texas, and lenders would routinely include the exhibit on homestead refinances, there would be little reason to require lenders to indicate its attachment under “Other(s) [specify]” of sub-section (H) “Riders.” Had Fannie Mae and Freddie Mac intended for the Renewal and Extension Exhibit to be marked as a rider, they would have likely drafted sub-section (H) “Riders” to have a pre-printed check box for the Renewal and Extension.

Note that Fannie Mae and Freddie Mac specifically designate the Renewal and Extension in non-uniform covenant 27 as an “exhibit,” not a “rider.” As further evidence of Fannie Mae’s intention to distinguish between a rider and an exhibit one can look at their website. The Renewal and Extension is not listed under the riders and no model form for the exhibit is provided.

The Renewal and Extension is no more a rider than an Exhibit “A” Legal Description is a rider.

It might be useful to look at how Black’s Law Dictionary defines an exhibit and a rider.

Exhibit, n. A paper or document produced and exhibited to a court during trial or hearing, or to a commissioner taking depositions, or to auditors, arbitrators, etc., as a voucher, or of proof of facts, or as otherwise connected with the subject matter, and which, on being accepted, is marked for identification and annexed to the deposition, report, or other principal document, or filed of record, or otherwise made a part of the case.
Rider, n. A schedule or small piece of paper reflecting an amendment, addition or endorsement annexed to some part of a roll, document, or record. Any kind of a schedule or writing annexed to a document which cannot well be incorporated in the body of such document. Such are deemed to be incorporated into the terms of the document.

Note that a rider amends, adds to, or is incorporated into the terms of the document. The base document is altered by the inclusion of the rider. This is not true of an exhibit. An exhibit is merely proof of facts connected with the subject matter. Since the Renewal and Extension Exhibit is evidence of the new lender’s subrogation rights in the lien(s) being paid off, it is clear than the Renewal and Extension Exhibit is truly an exhibit to the Deed of Trust and is not treated as a rider.