Question 17

The lender will obtain a security interest in the property when the husband and wife sign the mortgage.

For the lender to secure an interest in the property, both the husband and wife must sign the mortgage, despite only the wife signing the promissory note due to the husband's poor credit.

A) The husband and wife sign an addendum to the note.

An addendum to the note typically serves to modify the original terms of the promissory note rather than creating a security interest in the property. Since the mortgage itself is necessary to secure the lender's interest, this option does not meet the requirement.

B) The wife alone signs an addendum to the note.

If the wife alone signs an addendum to the note, it does not establish a security interest in the property. The mortgage, which requires both parties' signatures to confirm their joint tenancy and secure the loan, is the necessary document for the lender.

C) The wife alone signs the mortgage.

While the wife could potentially sign the mortgage alone, this would not be appropriate in a joint tenancy situation. The lender typically requires all owners of the property to sign the mortgage to ensure their interest is fully protected, making this option insufficient.

D) The husband and wife sign the mortgage.

This option accurately describes the necessary action to secure the lender's interest in the property. Both parties must sign the mortgage to confirm their joint ownership and enable the lender to enforce the security interest in case of default.

Conclusion

The correct answer is D because it ensures that the lender has a proper security interest in the property by having both owners sign the mortgage. Other options fail to provide the necessary legal framework to secure the lender's interest effectively, highlighting the importance of joint signatures in joint tenancy arrangements.