Bulletin: MI2009007

Date:
November 10, 2009
To:
All Michigan Issuing Offices
RE:
Home Equity Loans - Payoffs

Dear Associates:

As a result of the high incidence of claims involving the payoff of Home Equity Loans (HELOC's), the Company has developed a comprehensive procedure to secure a payoff and close the account on HELOC's (equity line/ future advance/revolving line of credit) mortgages. The title industries' claims result almost exclusively from the failure to successfully close the borrower's account with the Lender when paying off the "then" balance of the loan. Failure to close the account permits the borrower/mortgagor to "run up" the balance of the account again inducing the lender to then refuse to discharge the mortgage. Please find below the title commitment requirement and suggested payoff requests and demand letters to submit to the HELOC lenders.

Requirement

Submit to the Company a discharge of the home equity loan (revolving line of credit/equity line/future advance) mortgage executed by ____________ to ___________, dated _________, and recorded ____________, in Liber ___________, Page ____________, ___________ County Records in the amount of ____________.

Note: Should the parties fail to secure the above described discharge at closing, the following steps must be performed:

Pre-closing

1. Execution by the subject borrower of the Notice of Account Suspension and Request for Payoff Statement (Account Suspension /Payoff form) before the date of closing.

2. Delivery by the Company of the Account Suspension/Payoff form (signed by the borrower) to the current lender prior to closing by facsimile/telecopier.

3. Retention of a copy of the Account Suspension/Payoff form delivered to the current mortgagee and a copy of the facsimile/telecopier confirmation.

Closing

1. Execution by the borrower of a Notice of Account Closure and Request for Discharge of Mortgage (Account Closure/Discharge form) at closing.

2. Delivery by the Company of the executed Account Closure/Discharge form to the current mortgagee by:

a. facsimile/telecopier, at time of disbursement, and

b. overnight mail, immediately following disbursement.

3. Retention by the Company of a copy of the Account Closure/Discharge form delivered to the current mortgagee and a copy of the facsimile/telecopier confirmation.

4. In addition, "stamp" the payoff check with the wording: Demand to Close Account followed by a signature line, and signed by the borrower as follows:

DEMAND TO CLOSE ACCOUNT

______________________________

If you have questions related to this bulletin, please contact your local underwriting personnel or Stewart Legal Services.

This bulletin relates solely to the State of Michigan.

For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.

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:
MU000014 Payoffs: Residential Open End or Revolving Credit Loans
 
SLS2008015 Paying Off Line of Credit Mortgages
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
MI Notice of Account Closure
 
MI Notice of Account Suspension