- October 28, 1991
- All Issuing Agents
- FIRRERA and Subordinate Liens by RTC and FDIC
As we have previously discussed, the RTC takes the position that:
- They are required to provide consent before any of their inferior liens
are wiped out after a foreclosure sale. The inferior liens may either be a
trust deed or judgment; and
- Even after they have provided their consent, they have rights of redemption for a period of 1 year from the date of the foreclosure sale.
As a result, prior to insuring free and clear of the inferior lien subsequent to a foreclosure sale the Company policy will be to require:
- A recorded release of the lien together with any rights of redemption; or
- Placing an exception to the lien together with any rights in the property including but not limited to rights of redemption in the policy of title insurance.
I have attached a write-up for the failure to consent along with a write-up for the rights of redemption which should be used by your title officers and examiners in the appropriate instance.
More often than not, an inferior lien held by a failed institution, setting forth that it is currently controlled by the RTC or FDIC, will not be set out on the record. Therefore, before eliminating any inferior lien following a foreclosure sale, please call your local Stewart Title Guaranty underwriter for more information.
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.