Fannie Mae and Freddie Mac (“the GSEs”) jointly issued new model notes and security instruments to be used for single family residence loans in Pennsylvania. The new documents apply to fixed and variable rate loans and were made available for use on February 23, 2016. While lenders have the option to use the new documents immediately, the new documents will be required for any mortgages with notes dated after August 1, 2016.
The changes appear to be motivated by a Pennsylvania Superior Court case, which held that a note-holder was not entitled to a judgment for post-foreclosure expenses unless the parties had contracted to allow them. The Court explained that under Pennsylvania law, the terms of the judgment and the mortgage merged upon foreclosure and a lender could only charge a borrower for post-foreclosure costs, such as inspections or property taxes, if the agreement specifically allowed for it.