Bulletin: NM000008

Date:
March 22, 2002
To:
All Issuing Offices in New Mexico
RE:
New Rate, Rules, and Forms Effective March 1, 2002

Dear Associates:

Please be advised that the Superintendent has signed an "Amended Findings of Fact, Conclusions of Law and Final Order," on January 11, 2002. All Rules, Forms and Rates adopted as resulting from such final order take effect March 1, 2002. The significant findings and conclusion agree below.

Rates for Existing Construction loan Endorsements (NMAC 13.14.9.40)
The Superintendent corrected rates for Extension of Construction Loan Policy, Endorsement "A" (NM 18), Endorsement "D" (NM 19), and Subsequent Endorsement of Loan Policy to include Pending Disbursement Language, and Deletion of Mechanic's Lien Exception in Standard Loan Policy insuring a construction loan with evidence of priority. The corrected rate for each coverage is $25, instead of $32.

Independent Audit CPA Requirements (NMAC 13.14.2.14)
The Superintendent increased the exemption from the requirement that a CPA must complete the Independent Auditors Report to submit with the Agent Experience Report. The CPA requirements will not apply for any calendar year reporting period in which the agent writes less than $250,000 in premium. If two or more agencies are under common ownership or control the waiver shall not apply to any of those agencies if one of them writes $250,000 or more in premium. The Superintendent also adopted changes to the Agent's Experience Report.

Named Insured Endorsement (NMAC 13.14.6.8 and 13.14.6.9 and 13.14.10.40)
The Superintendent clarified that the Named Insured Endorsement (NM 55) must be attached to all Owner's Policies and Leasehold Owner';s Policies issued after August 15, 2001. There is no charge for this endorsement, unless the endorsement is requested after issuance of the policy and the policy was issued prior to August 15, 2001. In such case the charge for the endorsement is $25.

New Restrictions, Encroachments and Minerals Endorsements for Owner's Policies (NMAC 13.14.8.16)
The Superintendent adopted two new Endorsements available for both residential and commercial land:

1. NM 56 (ALTA Endorsement 9.1) Restrictions, Encroachments, and Minerals Endorsement (Owner's Policy - Unimproved Land). This Endorsement to the Owner's policy insures against violations of restrictions, encroachments on the land from adjoining land, and damage by reason of mineral development. It is similar to owner's comprehensive endorsements available in many other states. It is issued on unimproved land. The charge for this Endorsement is 10% of the Basic Premium Rate. Our Guidelines and the Endorsement are available through the references section at the end of this bulletin.

2. NM57 (ALTA Endorsement 9.2) Restrictions, Encroachments, and Minerals Endorsement (Owner's Policy - Improved Land). This Endorsement to the Owner's policy insures against violations of restrictions, encroachments over easements, building lines and property lines, and damage by reason of mineral development. It is similar to owner's comprehensive endorsements available in many other states. It is issued on improved land. The charge for this Endorsement is 10% of the Basic Premium Rate. Our Guidelines and the Endorsement are available through the references section at the end of this bulletin.

Technical Corrections to Reissue Owner's or Leasehold Rates (NMAC 13.14.9.12.1)
The Superintendent approved a non-substantive correction to the Reissue Rate Rule for Owner's, Leasehold Owner's and Contract Purchaser's Policies. The percentage of Basic Rate (up to the amount of insurance on the prior policy) shall be 90% (if the prior policy is three years or more), 85% (if the prior policy is two years or more, but less than three years), 80% (if the prior policy is more than one year, but less than two years), and 75% (if the prior policy is one year or less).

Leasehold Endorsements
The Superintendent adopted several changes to the rules and forms in order to adopt the new ALTA Leasehold Endorsements.

1. NM Form 4 (Leasehold Owner's Policy) is deleted.

2. NM Form 5 (Leasehold Loan Policy) is deleted.

3. NMAC 13.14.1.18 is amended to define a Leasehold Policy as the Owner's or Loan Policy, with the new Leasehold Endorsement attached.

4. NM Form 31 (Owner';s Leasehold Conversion Endorsement) was amended to conform to the new Leasehold Endorsements.

5. NMAC 13.14.6.9 and 13.14.8.9 were amended to require the new Leasehold Owner's Endorsement be attached to an Owner's Policy insuring a leasehold.

6. NMAC 13.14.7.9 and 13.14.8.9 were amended to require that the new Leasehold Loan Policy Endorsement be attached to a Loan Policy insuring a leasehold.

7. NMAC 13.14.18.34, NM Form 21 (Leasehold Loan Policy Endorsement) was amended by substitution of the new ALTA Endorsement 13.1 for the text of that endorsement. There is no separate charge for this endorsement. The endorsement is available through the references section at the end of this bulletin.

8. NMAC 13.14.18.33, NM Form 20 (Leasehold Owner's Endorsement) was amended by substitution of the new ALTA Endorsement 13 for the text of that endorsement. There is no separate charge for this endorsement. The endorsement is available through the references section at the end of this bulletin.

You will no longer issue the ALTA Leasehold Policy. Now you will issue the Owner's Policy or Loan Policy and attach the Leasehold Endorsement.

The definitions of Lease and Leasehold Estate in these new endorsements do not expressly except to the terms of the lease. If you are not furnished with a complete current estoppel certificate from the lessor and you are not insuring a newly created lease, you should except to the terms of the lease in Schedule B or you should except in Schedule B to "any failure to comply with the terms, provisions and conditions of the lease (refer to lease, and any recording information)." You should be satisfied that any mortgage or assignment of the leasehold is authorized by the lease or approved by the lessor, unless you secure underwriter approval.

New Rates
The Superintendent order the title insurance rates increased overall by 5.1%. The flat fees have not been changed. The graduated (variable) rates are increased by 5.7% commencing March 1, 2002, as shown on Exhibit 1.

The amended order adopts an allowable range of agent/underwriter premium division of 78-80% for agents and 20-22% for underwriters as applicable to transactions up to $2 million. Division of premium was not otherwise altered.

2001 Reports
These reports by title insurance agents, agencies and insurers must be received on or before July 1, 2002.

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.

EXHIBIT 1

Amount of Insurance Total Premium Charge to Customer
Up to$10,000 $196
$11,000 $205
$12,000 $212
$13,000 $222
$14,000 $231
$15,000 $241
$16,000 $249
$17,000 $259
$18,000 $267
$19,000 $276
$20,000 $285
$21,000 $294
$22,000 $303
$23,000 $313
$24,000 $322
$25,000 $330
$26,000 $337
$27,000 $346
$28,000 $353
$29,000 $360
$30,000 $368
$31,000 $375
$32,000 $384
$33,000 $390
$34,000 $397
$35,000 $405
$36,000 $412
$37,000 $421
$38,000 $428
$39,000 $435
$40,000 $443
$41,000 $449
$42,000 $458
$43,000 $465
$44,000 $472
$45,000 $480
$46,000 $487
$47,000 $496
$48,000 $503
$49,000 $509
$50,000 $517
Over $50,000 to $100,000 $6.28 per thousand
Over $100,000 to $500,000 $4.95 per thousand
Over $500,000 to $2 million $3.89 per thousand
Over $2 million to $5 million $3.12 per thousand
Over $5 million to $10 million $2.60 per thousand
Over $10 million to $25 million $2.48 per thousand
Over $25 million to $50 million $2.21 per thousand
Over $50 million $1.82 per thousand