17.02.9

R-8. Mortgagee Policy on a Loan to Take Up, Renew, Extend or Satisfy an Existing Lien(s).

See Also: 12.26 Mortgagee Policies .

Bulletins: TX000014 New Rules Effective October 30, 1992;
                   TX000017 Refinancing Loans on Homestead;
                   TX000030 New Rules and Forms; Effective August 1, 1995;
                   TX000034 (1) Owelty Liens; (2) Federal Tax Liens; (3) Homestead Designations; and (4) Pretended Sites of   Homestead;
                   TX000044 Commissioner's Order for 1996 Rate Hearing;
                   TX000048 Purchase Money and Refinance Issues;
                   MU000018 Title Search Requirements;
                   NL000017 Use of Starter Files.

Forms: TX Mortgagee Policy T-2 ;
             TX Mortgagee Policy Schedule A T-2 ; 
             TX Mortgagee Policy Schedule B T-2 .

R-8. Mortgagee Policy on a Loan to Take Up, Renew, Extend or Satisfy an Existing Lien(s).
On a Mortgagee Policy, issued on a loan to fully take up, renew, extend or satisfy an old mortgage(s) that is already insured by a Mortgagee Policy(ies), the new policy being in the amount of the note of the new mortgage, the premium for the new policy shall be at the Basic Rate, but a credit shall reduce the premium by the following amount:

a. 40% of the premium calculated at the current rate on the written payoff balance of the old mortgage, such renewal occurring within two (2) years from the date of the Mortgagee Policy insuring the old mortgage;

b. 35% of the premium calculated at the current rate on the written payoff balance of the old mortgage, such renewal occurring more than two (2) years but less than three (3) years from the date of the Mortgagee Policy insuring the old mortgage;

c. 30% of the premium calculated at the current rate on the written payoff balance for the old mortgage, such renewal occurring more than three (3) years but less than four (4) years from the date of the Mortgagee Policy insuring the old mortgage;

d. 25% of the premium calculated at the current rate on the written payoff balance of the old mortgage, such renewal occurring more than four (4) years but less than five (5) years from the date of the Mortgagee Policy insuring the old mortgage;

e. 20% of the premium calculated at the current rate on the written payoff balance of the old mortgage, such renewal occurring more than five (5) years but less than six (6) years from the date of the Mortgagee Policy insuring the old mortgage; and

f. 15% of the premium calculated at the current rate on the written payoff balance of the old mortgage, such renewal occurring more than six (6) years but less than seven (7) years from the date of the Mortgagee Policy insuring the old mortgage.

After the lapse of seven (7) years from the date of the Mortgagee Policy insuring the old mortgage, the Basic Rate shall apply.

Where more than one chain of title, as the term 'chain of title' is from time to time defined by the Commissioner, was involved in the issuance of the original policy(ies), and the new policy includes one or more of such additional chains of title involved in the issuance of the original policy(ies), an additional premium charge as established by the Commissioner shall be added for each additional chain of title involved. (See Rule R-9 for definition of "additional chain.")

On Mortgagee Policies, issued on multiple loans to fully take up, renew, extend or satisfy an old mortgage insured by a single Mortgagee Policy, the new policies being in the amount of the new mortgages, the premium for the larger Mortgagee Title Policy shall be at the Basic Rate, but a credit shall be allowed upon the premium as set forth previously in this rule. The premium for the remaining new Mortgagee Title Policy(ies) shall be at the Basic Rate.

The reduction in rate as herein prescribed shall not apply in any case where any additional property not covered by the original policy(ies) is included in the policy to be issued.

In calculation of the credit, the amount of the written payoff balance shall not exceed 100% of the original amount of the old mortgage. In no event shall the premium collected be less than the regular minimum promulgated rate for a Mortgagee Policy.

THIS RULE MAY NOT BE APPLIED in connection with the issuance of a series of Mortgagee Policies issued by reason of notes being apportioned to individual units in connection with a master policy covering the aggregate indebtedness, including improvements. Individual Mortgagee Policies must be issued at the Basic Rate.

Comment: The finance credit is available even if a new title company issues the second policy. You may assume that the refinanced mortgage was insured by a title policy if (1) it has a GF number, (2) it is returned to a title company, or (3) it is a first lien in favor of an institutional lender. This rule requires that the preexisting mortgage be fully taken up, renewed, extended or satisfied. A partial refinance is not subject to a credit under this rule. This rule does not apply if additional land, not covered by a prior Mortgagee Policy, is included in the new policy. However, if multiple mortgagesdeeds of trust are being fully refinanced and these mortgagesdeeds of trust covered different land, the credit is available so long as the current collateral is covered by at least one prior policy. The title company must charge at least the minimum charge ($229). The calculation of the credit is based upon the date of the most recent Mortgagee Policy (not including any endorsements to that policy) insuring the mortgage that is being renewed and extended. Thus, if there have been several refinances and several Mortgagee Policies, the title company should use the most recent policy date for calculation of the refinance credit.  The Date of the Original Indebtedness is the date of the mortgagee policy insuring the existing lien to be refinanced. Refinances on homestead may include "reasonable costs necessary to refinance" debt without becoming home equity loans.

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