Bulletin: FL000037

Date:
March 08, 1994
To:
All Florida Issuing Offices and Agents
RE:
Short Form Residential Loan Policy with Florida Modifications

Dear Associates:

Introduction

Stewart is pleased to announce the availability of the Short Form Residential Loan Policy with Florida Modifications. This format is ideally suited for lenders who want to have a policy at closing and desire to reduce the amount of paper contained in a policy. The forms are available from Stewart Forms and Information department in Houston, 1-800-729-1901.

The policy can be utilized in a variety of situations.

Property Types

This form may be used on the following property types:

One-to-four improved residential properties including Condos and PUD's.

Unimproved residential lots and acreage.

Loan Types

Purchase money mortgages.

Refinances.

Secondary and subordinate mortgages.

Special care must be exercised when issuing a Short Form Residential involving secondary financing. The most important thing is to place all mortgages having priority over the mortgages to be insured as exceptions in the Addendum.

Revolving Credit Mortgages. Since the approved Short Form does not contain a blank to add additional endorsements, if an insured requests a Revolving Credit Mortgage Endorsement, and the mortgage satisfied all underwriting requirements, you may add the following to the Addendum:

Note: The Revolving Credit Endorsement approved by the Florida Department of Insurance in §186-21 of the Administrative Code is incorporated herein.

Balloon Mortgage. If an insured requests a balloon mortgage and all underwriting criteria are met, you may add a note in the Addendum as follows:

"Note: The balloon Mortgage approved by the Florida Department of Insurance in §186-21 of the Administrative Code."

Construction Loans, one-to-four residential. Consult state counsel with any questions.

Any other permitted endorsements may be added to a policy in a like manner. Should you have any questions regarding additional endorsement, please call Stewart underwriting personnel.

How To Do It.

General Comments Regarding the Short Form Residential
It is the lender's prerogative to request the issuance of the Short Form Policy, and you would expect to determine whether or not a lender wishes to have the Short Form by reference to the closing instructions sent to you by the lender. The rate charged for the Short Form would be the same as if you are issuing a regular ALTA Loan Policy. The issuance of the short form policy is no short cut in the preparation you have traditionally done in the issuance of an ALTA Loan Policy. All the traditional skill and professional care in record searching, document examination study of exceptions and title underwriting must still be applied.

Schedule A Information

Amount of Insurance: This should reflect the amount of the mortgage being insured.

Premium: Premium will be the premium that you charge for the issuance of a regular ALTA Loan Policy, plus any premium-bearing endorsements.

File Number: Your own file numbering system.

Mortgage Amount: The amount of the mortgage to be insured.

Loan Number: The loan, if any, given to you by the lender.

Mortgage Date: The date the mortgage was executed.

Date of Policy: Normally would be the date of settlement. You should note the actual date insofar as coverage is concerned will be determined by the date of recording if it is later than the date of the policy. You should consult lender's closing instructions for variations.

Name of Insured: The lender or the assignee of the lender if the assignment is filed contemporaneously with the mortgage document. It will be permissible to add "its successors and/or assigns" if requested by the insured.

Name of Borrowers: Those parties which execute the mortgage instrument.

Property Address: This should be the actual address of the property which is security for the mortgage. It is important to recognize that neither form contains a legal description; therefore, you must be absolutely sure that the property address is correct. In the event the property does not have a street address, enter: None.

County and State: County and state in which the property is located

Schedule A - The "Boxes"

In order to reduce the amount of paper and multiplicity of forms, it was determined that boxes would be provided which would be checked off in the event additional coverage is requested through use of the common endorsements. By utilizing the boxes, it is unnecessary to attach the endorsement forms. If any of the endorsements requested by the lender are premium-bearing endorsements, the amount of premium charged for the endorsement should be included in the premium amount in the upper, right-hand corner of the Short Form Policy.

Addendum: You would simply check the appropriate box, depending on whether or not an addendum is necessary. Whether an addendum is necessary will depend on the endorsements that are checked, what a survey reveals, and where there is some special physical location, such as filled lands or seaside.

ALTA and Florida Endorsements: You will check the appropriate box reflecting the ALTA and/or Florida Endorsements(s) requested by the lender. It is unnecessary to attach any of the printed endorsements to the Short Form Policy or the Residential Loan Certificate. However, the following observations are made:

ALTA Endorsement 4.1 and 5.1. Because Florida law given Condo and PUD associations six (6) months of priority over first mortgages, you must always mark the 4.1 and 5.1 if the insured requests either Condo or PUD endorsement.

Florida Endorsement Form 9. If an insured requests this endorsement you must be furnished a survey, either a current survey or a survey that meets the underwriting criteria of prior bulletins. If the survey discloses matters such as encroachments, you must except to these items in the Addendum. If an insured requests this endorsement on a Condo or PUD property, you must decline to issue the endorsement or amend paragraph l.(a) of the endorsement by placing in the Addendum the following:

"Paragraph l.(a) of Florida Endorsement Form 9 (3/27/92), incorporated herein, is hereby amended to exclude assessment and maintenance liens which by law have priority over the lien herein insured."

Florida Survey Endorsement. You must obtain a survey that meets underwriting criteria of prior bulletins.

Schedule B

The greatest difference between the Short Form Residential Schedule B and the Schedule B you deal with in the long form is that you are not required to list specific exceptions. The pre-printed general exceptions will encompass the vast majority of specific exceptions. The fact that you do not list specific exceptions does not mean you perform any less rigorous examination procedures.

Addendum

The main purpose of the Addendum is to add exceptions which would otherwise not be included in the pre-printed exceptions in Schedule B. Some of the exceptions that might appear are:

Encroachments shown on a survey. If the form 9 is issued, a survey must be obtained and any encroachments must be excepted to. Depending on the nature of the encroachment, the Company may be willing to delete all encroachment from the Addendum but such a decision must be made by Stewart Underwriting personnel.

If the property is filled land and/or bordering water, the Addendum is the proper place to place any appropriate exception. Consult prior bulletins for normal underwriting requirements.

In the rare event that a Schedule C requirement in a commitment is to be carried over into the policy as an exception, you should place the exception on the Addendum page.

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.

References

Bulletins Replaced:
None
Related Bulletins:
None
Underwriting Manual:
11.28 Loan Policies
Exceptions Manual:
None
Forms:
None