Bulletin: NM2021002

Date:
February 25, 2021
To:
All New Mexico Issuing Offices
RE:
GENERAL - FORMS AND UNDERWRITING - OSI Rules Effective 1/1/2021

Dear Associates:

This bulletin reviews various changes which occurred as a result of the revised promulgated title insurance rules which went into effect January 1, 2021, related to forms and underwriting.

Attached to this bulletin is a summary of these changes with certain substantive revisions highlighted. You should be sure to review all rule changes to determine if your agency or operations are impacted by other changes not addressed in this bulletin or summary. You can find the complete set of new rules in the New Mexico Register here.

Rule 13.14.5.13 Removes the requirement that the proposed amount of insurance be $500,000.00 or more to issue pro forma policies.

What you should know

You may now furnish pro forma policies on land that is not one to four family residential property for any proposed amount of insurance.

Rule 13.14.6.11 Adds a requirement related to reissue policies.

What you should know

The new rule allows you to request the prior owner’s policy from the prior agency or insurer and requires that agency or insurer to provide the copy within 5 days. Allows for the prior agency or insurer to charge a reasonable retrieval fee as authorized by the rules. We suggest you determine in advance what fee you will charge and document the factors you considered in setting the fee.

Rule 13.14.7.19 Increases the cap on the Residential Limited Coverage Junior Loan Policies (NM form 45).

What you should know

Allows for the issuance of the Residential Limited Coverage Junior Loan Policies (NM form 45) on loans up to $125,000.00.

Rule 13.14.8.12 Removes certain requirements for issuing the insuring around endorsement (NM form 43).

What you should know

Allows issuance of the NM form 43 to insure around a lien or other adverse matter excepted to in Schedule B if the title insurer has determined that the lien or other adverse matter does not pose a material risk under the policy. It requires that a request from an insured and approval to remove an exception in lieu of issuing the endorsement be documented or otherwise memorialized in writing. We believe email communication, if retained in your file, will meet this requirement.

Rule 13.14.8.14 Changes the requirements for deleting certain coverages under the Restrictions, Encroachments, and Minerals Endorsements.

What you should know

Allows deletion of Paragraph (3)(b) of NM form 50, Paragraph 4 of NM form 50.1, Paragraph(2) of NM form 56 and NM form 56.1, Paragraph (2)(b) of NM form 57, or Paragraph 3 of NM form 57.1 “if minerals rights have been severed and the insurer, in its discretion, deems the risk of such coverage [not] to be acceptable[sic].” We believe email communication of the insurer’s acceptance of the risk, if retained in your file, will meet this requirement.

Rule 13.14.8.15 Adds the requirement for a survey to issue the Land Abuts Street Endorsement (NM form 51).

What you should know

You must be furnished with a satisfactory survey to issue the NM form 51. The survey should, at least, indicate that the property adjoins an open, publicly maintained street or road.

Rule 13.14.8.26 Adds the requirement for a survey to issue the Indirect Access and Entry Endorsement (NM form 68).

What you should know

You must be furnished with a satisfactory survey to issue the NM form 68. The survey should, at least, indicate that the easement adjoins a publicly maintained street or road and has existing curb cuts.

Rule 13.14.9.19 Requires a cancellation fee.

What you should know

The prior rule provided that you “may” charge a cancellation fee if you issued a commitment and the transaction failed to close and no policy was issued. That language was changed to now provide “If the transaction fails to close and no policy is issued, the title insurer or agency shall charge a cancellation fee.” The schedule of rates provides that you determine what is a reasonable and appropriate fee considering the nature and extent of the services you rendered.

Rule 13.14.18.8 Adds additional requirements for use of new, modified, or replacement forms.

What you should know

It provides that you may not issue a new form until:

  1. a rate is promulgated if a rate is required in the order, or if the order makes issuance contingent on a promulgated rate, and
  2. title insurer has provided to its title insurance agencies underwriting guidelines, compliant with the rules, to govern use of the form.

It provides that you may not issue a modified or replacement form until:

  1. the superintendent determines that the existing rate and rule applies to the modified or replacement form, or the superintendent has promulgated a new rate and rule, and
  2. title insurer has provided to its title insurance agencies underwriting guidelines, compliant with the rules, to govern use of the form.

Finally, it requires that you only issue forms that match in all substantive respects the promulgated forms.

All forms currently in the manual comply but very few modifications to existing and promulgated forms can be made without approval of the OSI.

Rule 13.14.18.9  Adds a requirement relating to additions to language in a promulgated form and changes the language required in Schedule A.

What you should know

The rule provides that additions to language in the promulgated form, if required to correctly identify and describe the risk being undertaken, may be inserted in an authorized form. Any such modification must be approved by:

  1. Legal counsel for the insured; or
  2. An authorized representative of the insured in a transaction that does not involve one to four family residential property.

It changes the wording required on the top of Schedule A of all commitments and policies. The new language is:

"Pursuant to the New Mexico title insurance law Section 59A-30-4 NMSA 1978, and title insurance rule 13.14.18.9 NMAC, no part of any title insurance commitment, policy or endorsement form promulgated by the New Mexico superintendent of insurance may be added to, altered, inserted in or typed upon, deleted or otherwise changed from the title insurance form promulgated by the New Mexico superintendent of insurance, nor issued by a person or company not licensed with regard to the business of title insurance by the New Mexico superintendent of insurance, nor issued by a person or company who does not own, operate or control an approved title abstract plant as defined by New Mexico law and regulations for the county wherein the property is located, except as authorized by law."

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.