- November 30, 2010
- All New York State Office Counsel, Managers and Agents
- Insuring at or after Mortgage or Deed of Trust Foreclosure Part 2
The purpose of this memo is to supplement our prior memo No. NY000459. Stewart Title Insurance Company will require, until further notice, that all issuing offices seek underwriter approval before insuring out of a foreclosure. Serious questions have been raised concerning foreclosures by institutional lenders/servicers. For example, GMAC, One West, Bank of America, and JP Morgan Chase have recently encountered possible errors in foreclosures and have suspended certain foreclosures. Stewart will no longer require the affidavit or certification provided in Bulletin NY000459.
If you are insuring title to a purchaser or lender after a foreclosure sale of a mortgage in New York, the following criteria for all foreclosing lenders must be complied with:
1: Verify that all foreclosure requirements (including a final, non-appealable judgment in a judicial foreclosure) under NY state law and our guidelines have been met and the requirements of Bulletins No NY000371 and NY000372, NY000460 NY00461 have been complied with.
2: Verify that all necessary parties have been named and served in the foreclosure.
3: Verify that the primary obligor(s) of the foreclosed mortgage have been personally served. If not, the provisions of CPLR 317 must be raised in your commitment/title report and excepted from the coverage of the Policy.
4: Verify that the foreclosing lender has standing to pursue foreclosure. The foreclosing lender must possess record standing at the commencement of the foreclosure. If foreclosing lender does not possess record standing at the commencement of the foreclosure, contact Stewart Agency Legal Services.
5: Verify that the lender is not currently pursuing a deficiency judgment against the mortgagors. If the lender is seeking a deficiency, Agency Legal Services must approve the transaction.
6: Verify that the mortgagor subject to the foreclosure is not in possession of the property. If the mortgagor is in possession when you issue your commitment/title report, the commitment/Title report and policies should contain the following exception:
"Any rights, claims or interest of (the mortgagor) in the land or any claim that the foreclosure by (lender) is invalid.
7: Determine that no other parties, such as tenants under prior leases, are in possession, because their rights may not have been extinguished by the foreclosure. For example, the Protecting Tenants at Foreclosure Act (which expires December 31, 2012) applies to "any foreclosure on a federally-related mortgage loan or on any dwelling or residential real property after the date of enactment of this title (May 20, 2009)" and allows a tenant to remain in possession under a prior lease under certain conditions.
Click here to view Title VII-Protecting Tenants at Foreclosure Act.
8: Verify that no governmental authority (e.g. State Attorney General) in the state in which the property is located has issued a demand or commenced litigation (such as the suit by the Ohio Attorney General against Ally Financial and GMAC) to halt foreclosures or REO sales. If such demands or litigation have issued/commenced, please contact a Stewart Agency Legal Services before proceeding.
9: Verify that no class action suits (such as the class action filed against GMAC in Maine) seeking to overturn/enjoin foreclosures or REO sales have been commenced which may affect the instant transaction. If such an action has been commenced please contact a Stewart Agency Legal Services before proceeding.
10: If you can verify that the above criteria have been satisfied, Submit a high liability request form together with the attached foreclosure certification to Stewart Agency Legal Services for approval.
Other Items to consider when Insuring out of a Foreclosure.
1: If you are asked to insure on the first sale after foreclosure, you should determine that the amount owed on the foreclosed mortgage exceeds the current resale price. Otherwise secure Agency Legal Services approval.
2: If other parties are in possession, the commitment and policies should except to rights of parties in possession or should except to the specific lease.
3: Except any applicable rights of redemption pursuant to any applicable State of Federal Statutes.
Foreclosure Certification Addendum to Policy Approval Form (click to view)
If you have questions related to this bulletin, please contact Stewart Agency Legal Services or your local underwriting personnel.
For online viewing of this and other bulletins, log onto: www.stewart.com/new-york
THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.
- Bulletins Replaced:
- Related Bulletins:
- NY000371 Purchase of New York "Subprime Home Loans"
- NY000372 New Act Relating to Mortgage Foreclosures and Subprime Loans
- NY000459 Insuring at or after Mortgage or Deed of Trust Foreclosure
- NY000460 Attorney Affirmation-Required in Residential Foreclosure Actions
- NY000461 Amendment to Real Property Law - Mortgagor Right to Recover Legal Fees
- Underwriting Manual:
- Exceptions Manual: