Bulletin: MA2016001

Date:
January 13, 2016
To:
All Massachusetts Issuing Offices
RE:
UNDERWRITING - Insuring Titles With Outstanding Home Equity Loans (HELOC’s) on Title

Dear Associates:

We frequently receive inquiries regarding insuring over prior owner undischarged home equity loans (HELOCs) which appear outstanding on the record title. It is important to note that these HELOC Mortgages are open lines of credit which permit the Borrower to continue to obtain draws against the HELOC until discharged of record. Accordingly, one should not assume that a HELOC is paid off and simply “undischarged” of record merely because it appears in the name of a prior owner of record. We have been made aware of numerous instances where a HELOC Mortgage that has in good faith been paid off and a “close out letter” has been issued, has subsequently been fully drawn against, in some instances, years after the Seller has sold the property.

This Bulletin is sent as a reminder to be mindful of verifying whether or not an outstanding Mortgage of record is a HELOC. If the Mortgage is a HELOC, you must have some form of satisfactory evidence that the line has been currently paid off in full and that a Discharge is currently forthcoming.

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

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:
12.28 Mortgages
Exceptions Manual:
None
Forms:
None