- May 18, 1994
- All Issuing Offices in Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming
- Payoffs: Residential Open End or Revolving Credit Loans
Frequently, the seller/borrower has a revolving line of credit loan secured by real estate.
The Problem: It is difficult to get a definite "final" payoff of this loan. This is particularly true if the loan is tied to use of a credit card or checks. Sometimes, the seller/borrower uses the credit card or checks after a payoff statement and prior to the closing. Then, the payoff you receive is not correct.
To limit the risk, do the following if the seller/borrower has a prior revolving credit loan.
- Use the "Request to Cancel Revolving Credit Loan" (see
referenced form below) with a payoff request. Each seller/borrower signs this.
If more than one person can make draws on the loan, all must sign. Verify if
more than one person has a credit card from the lender. The request tells the
lender to cancel the revolving line of credit account. It requires a release
or satisfaction. Send the letter at least two (2) weeks before closing. Require
each seller/borrower to send all credit cards and checks to the lender for
cancellation with the Request. If the mortgage has a procedure to cancel the
advances, require compliance. Do not accept a payoff that is conditional (see
form referenced below).
- At closing, reconfirm the payoff.
- Do same day payoff, (e.g., by wire) if possible.
- Require the Affidavit by the seller/borrower. (See form referenced
- If the lender will not give an unconditional payoff, require an
escrow of the maximum credit line plus interest until the lender agrees to
a release for the payoff.
For specific information about the New York law, please see bulletin NY000039 Satisfaction of Credit Line 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.
- Bulletins Replaced:
- Related Bulletins:
- NY000039 Satisfaction of Credit Line Mortgages
- Underwriting Manual:
- 12.28 Mortgages
- Exceptions Manual: