- December 28, 1998
- All California Issuing Offices and Agents
- Substitution and Reconveyance
We have recently seen several claims resulting from forged substitution and reconveyance documents (hereafter referred to as "S&Rs").
In the first instance, the S&R was accompanied by a zero demand apparently executed in the same hand. In the second, the deed of trust ran in favor of the trustor's former wife. There is evidence that the signature was actually made by the trustor's daughter. In neither instance was any attempt made to contact the beneficiary to determine whether the S&R was known to the beneficiary to be legitimate.
1. Any S&R not resulting from a payoff made directly to the named beneficiary or named beneficial assignee must be confirmed by direct contact with that beneficiary or beneficial assignee.
2.Any S&R in the chain of title not connected by time to a refinancing or conveyance of title which required new financing, and which is less than two years old at the time of the examination of title, must be confirmed by direct contact with the beneficiary or beneficial assignee.
3. All reconveyances recorded within two years of the examination of title must be examined and copies placed in the title file. The reconveyance by trustee should not require follow-up if the trustee is the trustee named in the deed of trust, although this issue has also been missed several times in recent history. The S&R, when found, shall be subject to the requirements stated above.
For the purposes of this bulletin, "direct contact" is defined as a telephone conversation instituted by title personnel, or by face to face conversation with the beneficiary. Understand that you may require identification, and that you may have to do some detective work to locate the necessary persons. This extra effort will aid in loss avoidance and prevention. Care should also be taken to document the direct contact, preferably with a notarized writing from the beneficiary, but in no case less than a full memorandum explaining the process used to locate the beneficiary, the time and date of the contact, and the content of the conversation held.
Questions or comments should be directed to your Stewart Title underwriter.
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.