Mortgages

Standard Exception Topic

MTG


Mortgages

When analyzing mortgages, you must consider deeds of trust which allow nonjudicial foreclosures.

Requirements

Standard Exception Subtopic

MTGR01

STG

10/13/2011
V 1

Require Release

The Company requires for its review and recordation a satisfactory release, reconveyance, or satisfaction of this mortgage.
Comment: The release, reconveyance, or satisfaction must comply with local practices. You must not rely on merger alone to waive a lien.

Standard Exception Subtopic

MTGR02

STG

10/13/2011
V 1

Proof of Valid Foreclosure

The Company has been informed that the title to the land to be insured will be based on foreclosure proceedings. The Company will require for its review satisfactory evidence that the foreclosure has occurred in compliance with applicable law, that the foreclosure has extinguished all subordinate interests, and that the mortgagor is no longer in possession of the land. At that time, the Company may make additional requirements or exceptions.
Comment: You must determine that a prior foreclosure (judicial or nonjudicial) complied with applicable law and extinguished all subordinate interests. You must verify that the mortgagor is not in possession.

Standard Exception Subtopic

MTGR03

STG

10/13/2011
V 1

Payoff of Equity Line Loan

Mortgage from _____________ to _________ recorded ____________, securing a note in the original principal sum of $_____________, and other obligations described therein. This mortgage secures an equity line loan. Prior to the final payoff, the Company requires a satisfactory written statement from the beneficiary that the account has been closed or frozen and, if applicable, satisfactory documentation from the borrower to close or freeze the account and/or a satisfactory full release for review and for recording concurrent with the payoff.
Comment: When paying off an equity or credit line mortgage, you must require the mortgagee to execute an unequivocal payoff that acknowledges the account is frozen and you must require that the borrower request a freeze of the line and tender all checks or cards. If this is not possible, you must hold the maximum possible amount that can be secured until you obtain a release.

Standard Exception Subtopic

MTGR04

STG

10/13/2011
V 1

Require Delivery of Release by Private Lender

The mortgagee is an individual or other noninstitutional lender. If this mortgage is to be satisfied or released at closing, the satisfaction or release must be presented at or prior to closing.
Comment: If you close a transaction, demand that the release from any noninstitutional lender be delivered in escrow. You should not rely upon a written payoff because of the unreliability of such parties.

Standard Exception Subtopic

MTGR05

STG

10/13/2011
V 1

Require Documents

Documents satisfactory to the Company creating the interest in the land and/or the mortgage to be insured must be signed, delivered and recorded.
Comment: The title commitment customarily requires a mortgage (or other instrument) from the proposed borrower. Additional requirements may be necessary when securing documents from fiduciaries or entities.

See Underwriting Manual


Standard Exception Subtopic

MTGR06

STG

10/13/2011
V 1

Require Mortgage

The Company requires for its review a satisfactory mortgage by the proposed mortgagor. The mortgage must then be signed, delivered, and recorded.
Comment: The title commitment customarily requires a mortgage (or other instrument) from the proposed borrower. Additional requirements may be necessary when securing documents from fiduciaries or entities.

See Underwriting Manual


Standard Exception Subtopic

MTGR07

STG

10/13/2011
V 1

Satisfactory Assignment

The Company requires for its review a satisfactory assignment of mortgage to the proposed insured mortgagee(s). In addition, the Company requires satisfactory evidence that the original note secured by the mortgage has been delivered to the proposed insured and has been properly endorsed.
Comment: In order to insure the assignee of a mortgage by new policy or endorsement, you should require a recorded assignment (in those states where required or customary). You must verify the original note is endorsed and delivered to the assignee or you must except to that issue.

Standard Exception Subtopic

MTGR08

STG

10/13/2011
V 1

Satisfactory Subordination

The Company requires for its review an unconditional, properly authorized subordination of the mortgage.
Comment: If you rely upon a subordination of mortgage in order to insure priority, you must require that it (1) be specific to the transaction and not an automatic or future subordination; (2) be unconditional (or except to the conditions in Schedule B-Part I); (3) be properly authorized by specific resolution of the Board or Loan Committee of the prior mortgage and be kept in its record (unless the loan is a single family refinance of a superior lien); and (4) be for value (part payoff of the existing loan, construction finance, one of several simultaneous mortgages), unless the policy insures a refinance of a prior lien.

3. Survey to be redated to show completed building before final advance is made on the building loan contract.
4. Certificate of Occupancy and other departmental certificates to be submitted to the company for inspection at or before the time final payment is made on the Building Loan Contract.
5. Pending water charges to be fixed from the date of completion of the building erected on premises shown in Schedule “A.”
6. Pending disbursement clause will appear in policy.

This mortgage was (by agreement dated __/__/__ ) or (by its terms) consolidated with the mortgage (or mortgages) excepted in Schedule “B” of this policy to form a single lien of $_______ and interest.

(a) the terms, covenants, conditions and provisions of the underlying mortgage(s) are excepted;
(b) estoppel certificates are required from the holders of existing mortgages (or exception will be taken against all loss, cost or damage, including attorney’s fees, resulting from a failure to obtain such estoppel);
(c) the proposed loan documentation is to be submitted to the Company for review in advance of closing (additional exceptions will be raised);
(d) the policy will except judgments and liens arising after the date of closing, which may obtain priority over the lien of the insured wraparound mortgage;
(e) the insured wraparound mortgagee must join in the mortgage for the purpose of assuming the obligation to pay the principal and interest of the underlying mortgage(s);
(f) in the event the insured desires the policy be updated by endorsement at the time payments or advances are made, same will be available if permitted at the time of the issuance of such endorsement, and if the charges therefor are paid in accordance with the requirements of the rate manual in effect at the time of such endorsement.

[recite the reason, such as:

assignment from ________ to ________ is missing
there is no assignment into the purported holder
a correction assignment is required]

Note: You may add additional local requirements here. Please consult with our underwriting personnel in preparing appropriate provisions.

Exceptions

Standard Exception Subtopic

MTGX01

ALTA

10/13/2011
V 1

Mortgage - Describes Note

A mortgage to secure an original indebtedness of $____________, and any other amounts or obligations secured thereby, recorded.
 Dated: ___________
 Mortgagor: ___________
 Mortgagee/Beneficiary: ____________
Comment: The Company prefers not to use this provision. Instead, the Company prefers to describe a mortgage without statement of any specific debt (e.g. MTG31).

Standard Exception Subtopic

MTGX02

ALTA

10/13/2011
V 1

Mortgage (Performance)

A mortgage to secure the performance of an agreement, or other obligation, recorded ___________.
 Dated: ___________
 Mortgagor: ___________
 Mortgagee/Beneficiary: ____________
Comment: Use this exception if the mortgage secures performance of an agreement or obligation.

Standard Exception Subtopic

MTGX03

ALTA

10/13/2011
V 1

Partially Released

A portion of the Land originally encumbered by mortgage recorded ____________, has been released by document recorded ________________.
Comment: You should describe any partial release of a mortgage to the extent it covers the examined land.

Standard Exception Subtopic

MTGX04

ALTA

10/13/2011
V 1

Assignment

According to the Public Records, the beneficial interest under the mortgage recorded __________, was assigned to __________, by assignment recorded __________.
Comment: You should use this language if the mortgage has been assigned of record.

Standard Exception Subtopic

MTGX05

ALTA

10/13/2011
V 1

Assignment (Mesne)

According to the Public Records, the beneficial interest under the mortgage recorded __________, has been assigned to __________, by mense assignment recorded __________.
Comment: You should use this language if the mortgage has been assigned of record.

Standard Exception Subtopic

MTGX06

ALTA

10/13/2011
V 1

Modification

A document recorded ____________ provides that the mortgage recorded ________, or the obligation secured thereby, has been modified.
Comment: You should use this language in describing a modification. A modification may cause a creditor’s rights issue if the lender receives more beneficial terms; the Policy or applicable endorsement must contain a creditor’s rights exception or exclusion if you insure the modification unless you secure approval by the Company.

Standard Exception Subtopic

MTGX07

ALTA

10/13/2011
V 1

Assignment of Rents

An assignment of _____, recorded _____, as additional security for the payment of the indebtedness secured by the mortgage recorded __________.
Comment: You should use this exception in describing lease or rental assignments. The Company prefers not to add this language in Schedule A when describing the mortgage.

Standard Exception Subtopic

MTGX08

ALTA

10/13/2011
V 1

Not all of Collateral Insured

The Indebtedness secured by the lien of the Insured Mortgage is also secured by property other than the Land.
Comment: If the mortgage secures other land not covered by a Policy, the Company prefers to add this note.

Standard Exception Subtopic

MTGX09

ALTA

10/13/2011
V 1

Subordination

A document recorded ______, provides that the lien or charge of the mortgage recorded _______ was subordinated to the _______, recorded _________.
Comment: You should use this language if a mortgage or other matter is subordinated and contains conditions.

Standard Exception Subtopic

MTGX10

ALTA

10/13/2011
V 1

Policy Insures Subordination

The item recorded ___________ is subordinate to the lien of the Insured Mortgage.
Comment: Use this language if a subordination is unconditional, is specific to the transaction, and is properly authorized.

Standard Exception Subtopic

MTGX11

ALTA

10/13/2011
V 1

Foreclosure Suit

Suit to foreclose the mortgage recorded __________ has commenced, as evidenced by document recorded __________.
Court:
Case No.:
Attorney Information:
 Name:
 Address:
 Phone Number:
Comment: You should use this language to describe a pending suit to foreclose.

Standard Exception Subtopic

MTGX12

ALTA

10/13/2011
V 1

Insured Assignment Exception

Impairment, loss or failure of title to the beneficial interest transferred to the Insured resulting from:
(A) Lack of possession of the original promissory note, secured by the Insured Mortgage, or
(B) The absence from the original promissory note of a proper endorsement to the insured assignee.
Comment: You should use this language in the Loan Policy or in the assignment endorsement that insures an assignment unless the endorsement (if issued) contains a similar exception, or unless the assignment is from institutional lender to institutional lender on 1-4 family residential property, or unless you verify that the endorsement and delivery occurred.

Standard Exception Subtopic

MTGX13

ALTA

10/13/2011
V 1

Collateral Assignment

According to the Public Records, the beneficial interest, under the mortgage recorded _________________, was collaterally to ______________, by assignment recorded ______________.
Comment: You should use this language if a mortgage is collaterally assigned. You must obtain releases or assignments from both the assignor and assignee. You must not insure a collateral assignment unless you except to the terms of the collateral assignment, you except to the right of the collateral assignor, and the note is delivered to the collateral assignee. In the alternative, the policy may insure the collateral assignor and assignee “as their interests may appear.”

Standard Exception Subtopic

MTGX14

ALTA

10/13/2011
V 1

Additional Advance

A document disclosing an additional advance in the amount of $_____ recorded _______ pursuant to that mortgage recorded _____________.
Comment: Use this provision when an additional advance has been made as evidenced by recorded instrument. However, intervening interests may have priority over the advance.

Standard Exception Subtopic

MTGX15

ALTA

10/13/2011
V 1

Revival of Mortgage

The mortgage, recorded _____________, that was eliminated by the foreclosure of a senior encumbrance, may be revived if the Title is reacquired by the mortgagor or related entity.
Comment: If the mortgagor or a related party (possibly acting for the mortgagor) reacquires title after a foreclosure, all subordinate matters, including subordinate mortgages or deeds of trust, may be deemed to be reinstated. If this situation may occur in the proposed transaction, add this exception.

Standard Exception Subtopic

MTGX16

ALTA

10/13/2011
V 1

Right of Redemption

Rights of redemption of any owner, lienholder, or other party in interest for ____________ days from the foreclosure sale of the Land, dated ____________ and recorded ____________.
Comment: If state law creates a right of redemption, you must add this exception.

Standard Exception Subtopic

MTGX17

ALTA

10/13/2011
V 1

U.S.A. Right of Redemption

The rights, if any, of the United States to redeem the Land within 120 days of the _______ sale held on ________.
Comment: In the event of a judicial foreclosure of a prior lien, the U.S. has a right for 120 days or any longer time allowed by state law.

Standard Exception Subtopic

MTGX18

STG

10/13/2011
V 1

Insured Mortgage Secures Other Debt

Mortgage from ___________ to ___________ recorded ___________ to the extent it secures indebtedness and obligations other than that note described in Schedule A.
Comment: Sometimes a policy insures a mortgage only in connection with a specific portion of debt (e.g., one facility or note). In that case, the policy may describe the mortgage in Schedule A as it secures that note and may then except to the mortgage in Schedule B as the mortgage secures other debt.

Standard Exception Subtopic

MTGX19

STG

10/13/2011
V 1

Mortgage (Describes Debt)

Mortgage from ____________ to ____________ recorded ____________, securing a note in the original principal sum of $____________, and other obligations described therein.
Comment: The Company prefers not to use this provision. Instead, the Company prefers to describe a mortgage without statement of any specific debt (e.g. MTG31).

Standard Exception Subtopic

MTGX20

STG

10/13/2011
V 1

Mortgage (Does not Describe Debt)

Mortgage from ____________ to ____________ recorded ____________, securing the indebtedness and other obligations described therein.
Comment: The Company prefers to use this provision in describing a mortgage so that the policy does not describe specific debt.

Standard Exception Subtopic

MTGX22

STG

10/13/2011
V 1

General Subordinate Matters Exception

Matters which affect the title to said estate or interest, but which are subordinate to the lien of the insured mortgage.
Comment: You should use this language if you determine that the matter not otherwise excepted (such as a judgment lien) is subordinate to the insured lien. If the subordination is conditional, you must specifically except to its terms. You may use this language or show the subordinate matters in Schedule B-Part II.

See Underwriting Manual


Standard Exception Subtopic

MTGX23

STG

10/13/2011
V 1

Not all of the Collateral is Insured

The indebtedness secured by the lien of the insured deed of trust described in paragraph No. 4 of Schedule A is further secured by property other than the land described in paragraph No. 5 of Schedule A. The title to such additional property is not insured hereby.
Comment: If the mortgage secures other land not covered by a Policy, the Company prefers to add this note.

Standard Exception Subtopic

MTGX24

STG

10/13/2011
V 1

Questionable Assignment (Not in Chain)

An assignment from ______________ to ______________ recorded which purports to transfer the beneficial interest under said mortgage. At the date thereof, the named assignor was not the record holder of the beneficial interest.
Comment: You must use this exception if the assignor did not appear to be the current mortgagee. You must also require that the record holder assign its rights in order to rely on a release or assignment.

Note: You may add additional local exceptions here. Please consult with our underwriting personnel in preparing appropriate provisions.

Schedule A

Standard Exception Subtopic

MTGS01

STG

10/13/2011
V 1

Other Collateral

For Informational Purposes Only: The indebtedness secured by the mortgage is or may be additionally secured by _______________, which is not insured.
Comment: The Company prefers to describe collateral documents (such as UCCs or lease assignments) in a note or in Schedule B, instead of in Schedule A, when insuring the related mortgage.

Standard Exception Subtopic

MTGS02

STG

10/13/2011
V 1

Mortgage (Describes Debt)

Mortgage from ____________ to ____________ recorded ____________, securing a note in the original principal sum of $____________ described therein.
Comment: The Company prefers not to use this provision. Instead, the Company prefers to describe the mortgage without describing any specific debt.

Standard Exception Subtopic

MTGS03

STG

10/13/2011
V 1

Mortgage (Does not Describe Debt)

Mortgage from ____________ to ____________ recorded ____________, securing the indebtedness described therein.
Comment: The Company prefers to use this provision in describing a mortgage so that the policy does not describe specific debt.

Standard Exception Subtopic

MTGS04

STG

10/13/2011
V 1

Partially Released

A portion of the land has been partially released by the instrument recorded ________________.
Comment: You must describe any partial release of a mortgage to the extent it covers the examined land.

Standard Exception Subtopic

MTGS05

STG

10/13/2011
V 1

Assignment

Assigned to ____________ by the instrument recorded ____________.
Comment: You should use this language if the mortgage has been assigned of record.

Standard Exception Subtopic

MTGS06

STG

10/13/2011
V 1

Modification

Modified by the instrument recorded ____________.
Comment: You should use this language in describing a modification. A modification may cause a creditors’ rights issue if the lender receives more beneficial terms; the Policy or applicable endorsement must contain a creditors’ rights exception or exclusion if the policy insures the modification unless you obtain approval by the Company.

Standard Exception Subtopic

MTGS07

STG

10/13/2011
V 1

Assignment of Rents

An assignment of rents and leases to ____________ recorded.
Comment: You should use this exception in describing lease or rental assignments. The Company prefers not to add this language in Schedule A in the description of the mortgage.

Standard Exception Subtopic

MTGS08

STG

10/13/2011
V 1

Additional Advance Made

An additional advance secured by said mortgage, as disclosed by an instrument recorded _________________.
Comment: You must use this provision when an additional advance has been made as evidenced by recorded instrument. Intervening interests may have priority over the advance.

Note: You may add additional local Schedule A provisions here. Please consult with our underwriting personnel in preparing appropriate provisions.