Bulletin: MI2009008

Date:
November 10, 2009
To:
All Michigan Issuing Offices
RE:
Mortgage Foreclosures - Condominium Association Liens

Dear Associates:

Please be advised that on all mortgage foreclosure commitments or Michigan Mortgage Foreclosure Guarantee & Commitments, we shall need to take exception to condominium association liens in Schedule B with a notation that same will not be removed from the policy upon the successful completion of the foreclosure process, if the foreclosing entity is an assignee of the original lender under an assignment that was recorded after the condominium association lien.

The Oakbrook Condominium Association v. Hubbell and Midfirst Bank case determined that a mortgage assignment is a "conveyance" to a "purchaser" of the mortgage interest under the conveyancing laws of Michigan, MCL 565.34 and MCL 565.35. The logic of the Court then followed that the priority of the first mortgage extends only to the original mortgagee, and that an assignee's interest is not that of the original mortgagee. Since the Condominium Act, MCL 559.208(1), provides that condominium liens are subordinate to "sums unpaid on the first mortgage," it was concluded that the condo association lien has priority over the subsequently assigned interest of the assignee lender.

For underwriting purposes, we shall strictly construe this holding to apply to only condominium association liens and not to other subsequently recorded liens or claims of interest. Thus, you may show other subsequent matters as being extinguished by a proper foreclosure of the original mortgage initiated by an assignee of the original lender.

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

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:
None
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
None