- January 29, 2010
- All Issuing Offices
- Short Sales
This bulletin supplements the Company's policies regarding short sale transactions. It should be read in conjunction with prior Short Sale bulletins, referenced below.
Payments to Junior Lenders
Short sales may involve both first and second mortgages. All liens must remain as exceptions unless they are released. This may involve negotiation between the borrower and the first and second lenders. The escrow instructions that you receive from the first mortgagee may restrict or prohibit payments to a second mortgagee.
It has been reported that some second mortgagees or their representatives have requested payments to be made outside of closing, as a condition to releasing their junior liens.
If you are aware of any payment made to any lienholder, whether disbursed from proceeds at closing or paid outside of closing, you must show all such payments on the HUD-1 Settlement Statement.
Restrictions on Subsequent Sales
Some first mortgagees insert conditions restricting the subsequent sale of the property for a period of time after the closing, for example, 30 days. If you encounter such a provision:
- Obtain an affidavit from the buyer confirming that the property will not be sold within that timeframe. Click here for Buyer Subsequent Sale Affidavit.
- Insert the following exception in the Owner's Policy excepting to the terms of the payoff and any claim of reinstatement of the lien for failure to comply (insert references to the time period and the mortgage that was satisfied):
The transaction vesting the Title as shown in Schedule A is subject to a condition prohibiting the transfer of the Title within ____ days after Date of Policy.Thispolicy exceptsany claim of reinstatementor refusal to releasethe _______________ lien recorded ________________ as a result of the failure to comply with said condition.
If you have questions relating to this bulletin, please contact Stewart Legal Services or your local underwriting personnel.
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.