Bulletin: MT000011

Date:
December 22, 1998
To:
All Issuing Offices in Montana
RE:
Home Equity Policy

Dear Associates:

As you may know, the Home Equity Policy ("H.E.P") of Stewart Title Guaranty Company was developed to provide value-priced title insurance coverage for institutional equity loans. The H.E.P. may not be used to insure first mortgages. It is to be issued only to institutional commercial lenders making equity loans on 1-4 family residential dwellings. This product may be useful when marketing to lenders who specialize in such equity financing.

The policy consists of: (1) a policy jacket; (2) a Schedule A; (3) a continuation endorsement; and, (4) a revolving credit-variable rate endorsement. Please note the forms referenced at the end of this bulletin.

  1. Policy jacket

    There are no traditional insuring clauses. The coverage is limited to loss due to any incorrectness of the assurances made in Schedule A.

  2. Schedule A

    Some of the information needed is the legal description, property address, latest available tax information, last conveyance document, and all outstanding mortgages and outstanding statutory monetary liens. A title search for this information must be performed.

    The use of the H.E.P. is generally limited to those instances when a deed is the last recorded document in the chain of title purporting to convey fee title to the land described in the policy. If a document other than a deed is the "last document" purporting to convey fee title, then submit the chain of title to your underwriting contact who will consult with a Senior Underwriter and decide whether or not a H.E.P. is to be issued.

    Under Paragraph 3, appropriate "Exceptions" include mortgages, deeds of trust, trust deeds, and financing statements (that describe real property and crops, timber, minerals, and other goods which are or are to become fixtures) and any other security instruments. Other liens that should be included are abstracts of judgments, tax liens (city, county, state, and federal), mechanic's liens, relevant divorce decrees, and lis pendens.

    Note that the title search does not have to include other title matters such as easements or restrictions.

  3. Continuation Endorsement

    This form can be used to "down date" the title either prior to closing and recording of the equity loan documents, or subsequent to the recording of the loan documents to reflect the recording.

  4. Revolving Credit-Variable Rate Endorsement

    This form can be used when the loan has a revolving credit feature, a variable rate feature, or both.


The filed rate in Montana is a minimum charge of $50 for $1,000 of coverage and $2.00 per $1,000 of liability thereafter to a maximum liability of $100,000, unless prior approval is obtained from the National Legal Department for a higher amount of liability. No credits or reductions in the charge are available for re-issue, and there is no other type of reduced charge available. This rate includes the continuation endorsement and the revolving credit-variable rate endorsement. The charge does not include search and settlement fees.

Should you have any questions, please call your Stewart contact or any Senior Underwriter in Houston.

Practices for Home Equity Policy:

  • Customer Group. Applications or orders for a H.E.P. should only be accepted from institutional commercial equity lenders making consumer loans. Included in this identified group are banks, savings and loan associations, and credit unions.

  • Type of Property. The H.E.P. can be used only for 1-4 family residential dwellings.

  • Lending Limitations. Loans in excess of $100,000 must be authorized by approved underwriting personnel.

  • Underwriting and Legal Decisions. Questions relating to underwriting should be referred to Senior Underwriters in Houston.

  • Type of Loans. The H.E.P. is available only for secondary financing, and not for first mortgages.

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.