- June 06, 1994
- All Issuing Offices
- Durrett Revisited
On May 23, 1994, the Supreme Court decided in BFP v Resolution Trust Company that the sale price obtained at a judicial or non-judicial foreclosure sale will, by law, constitute "reasonable equivalent value" under Section 548 (a)(2) of the Bankruptcy Code. This decision effectively reverses Durrett and similar cases which created a litmus test relating to "fair market value" as they relate to mortgage foreclosures.
The majority opinion emphasized that this decision applied only to mortgage foreclosures of real estate. If you are dealing with a deed in lieu, tax sales, or other foreclosures or forced sales, you should use underwriting guidelines in the Company's prior bulletin regarding Durrett.
Therefore, if you are insuring a judicial or non-judicial foreclosure sale or a resale after the foreclosure sale and the record does not disclose collusion, you do not have to include a "Durrett" exception in either the commitment or the policy.
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.