Bulletin: NL000003

Date:
October 23, 1989
To:
All Issuing Offices
RE:
Forgeries

Dear Associates:

Title Companies can sustain huge losses occasioned by alleged forged releases appearing in the chain of title.

Example: A land owner placed a mortgage on the property involved, followed in a few months with a release of such lien, after which appeared in a few weeks another mortgage, and on down the line. All releases were dated prior to the new deed of trust. Normally, the release of the former mortgage should be dated subsequent to the new deed of trust because the funds from the new loan are used to pay off the former mortgage before obtaining the release. In one instance, there were six liens placed on the same property and five forged releases within a period of five years. Aggregate indebtedness created by such liens were $840,000.00. Payments on all liens (where releases were forged) were kept current. Different loan companies, title companies and closers were used. In most instances, several loans and several releases were used in a short period of time. Such forgeries are amazingly accurate and complete as to forms, seals, signatures and acknowledgments.

Preventive Measures

  • In a transaction involving the issuance of a loan or mortgagee policy in excess of $100,000.00, company policy requires that the last lienholder executing a release within one year of the current transaction be contacted to confirm that such mortgage is paid and such release is valid. Inform your appropriate personnel as to this policy and the reason therefor.

  • Alert all examiners and title officers to watch for unusual circumstances as described in the Example and if anything looks suspicious or unusual to telephone the prior mortgage holder to see if it actually received the money. Escrow officers are normally unaware of instruments in the chain of title. You will have to depend on examiners and title officers to watch for this.

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:
6.36 Forgeries
Exceptions Manual:
None
Forms:
None