Bulletin: MU000023

Date:
September 03, 1997
To:
All Issuing Offices in Alabama, Alaska, Arizona, Arkansas, Colorado, Connecticut, Delaware, District of Columbia, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New York, North Carolina, North Dakota, Ohio, Oklahoma, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming
RE:
ALTA Endorsement Forms 11 and 12 Guidelines

Dear Associates:

The American Land Title Association has adopted two new endorsements: the ALTA 11 (Mortgage Modification) and ALTA 12 (Aggregation). These endorsements are in the process of being filed in those states in which filing is required. The ALTA Form 11 Endorsement will bear a premium as provided in the rate filing or as provided in our local instructions (if no rate filing is required).
ALTA Endorsement 11 (Mortgage Modification)

Explanation

This endorsement insures the lender that (1) the modification of mortgage does not result in invalidity or unenforceability of the insured mortgage; and, (2) the mortgage, as modified, has priority over defects, liens, and encumbrances, except those in the policy and prior endorsements and except those set forth in this endorsement. The endorsement does not insure against creditors' rights issues arising out of the modification.

Underwriting Requirements

· You must search the public records from the Date of Policy of the mortgage and you must secure a name search of the mortgagors and successors in ownership.

· Require joinder in the modification by the current owners of the estate or interest in the land and require proof of authority by those signing on behalf of the current owners.

· If the mortgage covers a lease, require a current estoppel and consent by the lessor.

· If the policy reflects a mortgage or other lien in Schedule B, Part II (as subordinate), require new subordination by the lienholder or except under paragraph 2 of the Endorsement.

· If your search reflects intervening matters such as mortgages, liens, covenants or easements, require subordinations or except under paragraph 2 of the Endorsement.

· If your search reflects a notice of bankruptcy by the owner, require a final nonappealable order authorizing the modification.

· If your search reflects a partial release, reconveyance or discharge of the mortgage, except under paragraph 2 of the Endorsement. If your search reflects a full release, reconveyance or discharge, do not issue this Endorsement.

· If your search reflects that the record mortgage holder is not the current lender on the modification, require an assignment from that holder.

· Secure a current tax and assessment search. Except under paragraph 2 of the Endorsement to unpaid taxes and assessments.

· Verify that the mortgage as modified does not secure advances for construction and that there has been no recent lienable work of improvement.

· Verify the parties in possession. If the Loan Policy does not contain an adequate exception, add an exception to those rights in paragraph 2 of the Endorsement.

· Require a current survey, unless our survey guidelines do not require a survey, or unless you except to survey matters arising subsequent to Date of Policy.

· Record the modification.

ALTA 12 (Aggregation)

Explanation


This Endorsement is called the "tie-in," "cluster," or "spreader" endorsement. It is issued with the Loan Policy in many states on commercial transactions. The Endorsement aggregates the Amount of Insurance on each Loan Policy listed in the Endorsement. This Endorsement to multiple Loan Policies results in one liability for all policies; it creates the same result as one Policy covering multiple sites. This Endorsement is not designed to be issued with the Owner's Policy.

Underwriting Guidelines

· Underwriting Personnel of the Company (Stewart Title Guaranty Company) must approve issuance of this Endorsement.

· If the aggregate limit of liability exceeds the Company's self-imposed or statutory limits for single risks in your state, you must contact the Reinsurance Department of the Company.

· We prefer to show allocated amounts for the "Amount" of each policy, rather than the aggregate (generally the loan amount) liability for the separate Amount of Insurance for each Policy.

· This Endorsement is not available in some states. The multistate Aggregation Endorsement may not be issued in Florida. In Florida, only intrastate tie-in endorsements may be issued. In Texas, Pennsylvania, and New Mexico, no tie-in or aggregation endorsement may be issued. In those states, one policy may be issued covering all tracts located in the state.

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.