Deeds of Trust

Standard Exception Topic

DTS


Deeds of Trust

A deed of trust or trust deed is a lien that creates a power of sale by the Trustee. Numerous requirements must be satisfied to insure a deed of trust or mortgage or a foreclosure of that lien.

Requirements

Standard Exception Subtopic

DTSR01

STG

10/10/2011
V 1

Release by Noninstitutional Lender

The beneficiary is an individual or other noninstitutional lender. If this Deed of Trust is to be satisfied or released at closing, the satisfaction or release must be presented at or prior to closing.

Comment:
If a noninstitutional lender is a beneficiary of a deed of trust, always require the release to be delivered in escrow. Do not rely on a written payoff.

Standard Exception Subtopic

DTSR02

STG

10/10/2011
V 1

Payoff of Credit Line

Deed of Trust from ____________ to ____________ for the benefit of _________ recorded _____________, securing a note in the original principal sum of $____________ and other obligations described therein. This Deed of Trust is reflected as 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 closing or freezing the amount and/or a satisfactory full release for review and for recording concurrent with payoff.
Comment: To pay off a credit line loan, you must receive an unconditional payoff from the lender freezing its account, or you must hold in escrow the maximum potential loan plus additional amounts for interest. The borrower must freeze its credit lien and return the card or checks. If possible, the borrower must freeze its credit pursuant to state law requirements.

Standard Exception Subtopic

DTSR03

STG

10/10/2011
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

DTSR04

STG

10/10/2011
V 1

Require Deed of Trust

The Company requires for its review a satisfactory Deed of Trust by the proposed mortgagor. The Deed of Trust 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

DTSR05

STG

10/10/2011
V 1

Foreclosure

Deed of Trust from ____________ to ____________ for the benefit of _________ recorded _____________, securing a note in the original principal sum of $____________ and other obligations described therein, apparently foreclosed by the trustee’s deed recorded ____________. The Company requests for its review satisfactory evidence that the sale occurred in accordance with applicable law and the Deed of Trust. The Company also requires satisfactory evidence 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 confirm that the trustee’s sale complies with the deed of trust and applicable law. Do not insure after foreclosure if the mortgagor remains in possession unless you secure the Company’s approval.

Exceptions

Standard Exception Subtopic

DTSX01

ALTA

10/10/2011
V 1

Deed of Trust - Describes Note and Loan Number

Deed of Trust to secure an indebtedness in the amount shown below, and any other obligations secured thereby:
Amount: $_________
Dated: __________
Trustor: __________
Trustee: __________
Beneficiary: __________
Recorded: __________
Address: (optional) 
Loan No. (optional) 
Comment: This exception describes the secured note. The Company prefers not to describe the note if possible.

Standard Exception Subtopic

DTSX02

ALTA

10/10/2011
V 1

Deed of Trust - Describes Note

Deed of Trust from ____________ to ____________ for the benefit of ____________ recorded ____________, securing a note in the original principal sum of $___________ and other obligations described therein.
Comment: This exception describes the secured note. The Company prefers not to describe the note if possible.

Standard Exception Subtopic

DTSX03

ALTA

10/10/2011
V 1

Deed of Trust - Does Not Describe Note

Deed of Trust from ____________ to ____________ for the benefit of ____________ recorded ____________, securing the indebtedness and other obligations described therein.
Comment: This exception does not describe the secured note. The Company prefers not to describe the note if possible.

Standard Exception Subtopic

DTSX04

ALTA

10/10/2011
V 1

Assignment

The Deed of Trust recorded __________ was assigned to ___________ by instrument recorded __________.
Comment: This exception describes a complete assignment of the lien and note. Do not use if only a participation interest or collateral assignment is filed.

Standard Exception Subtopic

DTSX05

ALTA

10/10/2011
V 1

Assignment of Beneficial Interest

The beneficial interest under the Deed of Trust recorded ___________ was assigned to _____________ by instrument recorded ______________.
Comment: This exception describes a complete assignment of the lien and note. Do not use if only a participation interest or collateral assignment is filed.

Standard Exception Subtopic

DTSX06

ALTA

10/10/2011
V 1

Assignor is Not the Holder

The purported assignment executed by ______________ to ________________ and recorded __________________ of the Deed of Trust recorded ____________ was executed by a person that was not the record holder of the beneficial interest.
Comment: Do not rely upon an assignment (e.g., for release or foreclosure) if not satisfied as to the ownership of debt of record.

Standard Exception Subtopic

DTSX07

ALTA

10/10/2011
V 1

Collateral Assignment

The beneficial interest of _________________ under the Deed of Trust recorded _____________ was assigned to ________________ as collateral security by instrument recorded ______________.
Comment: If a loan is collaterally assigned, secure releases and assignments from both the collateral assignee and collateral assignor. Do not insure a collateral assignment unless you secure the Company’s approval.

Standard Exception Subtopic

DTSX08

ALTA

10/10/2011
V 1

Modification

The Deed of Trust recorded __________________ was modified by instrument recorded _________________.
Comment: Use this exception to describe a modification of a mortgage. If insuring a modification, determine that it does not create a novation or prejudice subordinate liens and interests. Otherwise, except to the priority of those matters. If the lender gets additional interest or better terms, add a creditor’s rights exception.

Standard Exception Subtopic

DTSX09

ALTA

10/10/2011
V 1

Subordination

Deed of Trust recorded _______________ was subordinated to ____________________ as provided by instrument recorded ____________.
Comment: When insuring that a lien is subordinate, do not rely on blanket, future, or general subordinations. Require a specific corporate resolution from savings associations and banks that subordinate (unless a refinance on single family residence).

Standard Exception Subtopic

DTSX10

ALTA

10/10/2011
V 1

Doubtful Priority

No insurance is given as to the priority existing between the Deed of Trust recorded ___________ and the Deed of Trust (or Deeds of Trust) recorded concurrently therewith.
Comment: Add this exception if the priority of concurrent Deeds of Trust is not established in the Deeds of Trust or separate subordination agreements.

Standard Exception Subtopic

DTSX11

ALTA

10/10/2011
V 1

Subordination to Concurrent Deeds of Trust

The Deed of Trust recorded _____________ recites that it is subordinate to the Deed of Trust recorded concurrently therewith.
Comment: Use this additional exception if the Deed of Trust recites that it is subordinate to a concurrent Deed of Trust. When insuring that a lien is subordinate, do not rely on blanket, future, or general subordinations. Require a specific corporate resolution from savings associations and banks that subordinate (unless a refinance on single family residence).

Standard Exception Subtopic

DTSX12

ALTA

10/10/2011
V 1

Notice of Default

Notice of default under the terms of the Deed of Trust recorded ___________________ by the alleged owner and holder of the note secured thereby recorded ____________________.
Comment: If a notice of default of an unreleased deed of trust has been recorded, the Company recommends reference to that notice for information to the parties.

Standard Exception Subtopic

DTSX13

ALTA

10/10/2011
V 1

Trustee Substitution

A substitution recorded ________________ of _________________ as trustee under the Deed of Trust recorded ___________.
Comment: If a trustee substitution has occurred, the Company recommends that you refer to the substitution.

Standard Exception Subtopic

DTSX14

ALTA

10/10/2011
V 1

Notice of Trustee's Sale

A Notice of Trustee’s Sale recorded ________________ executed pursuant to the Deed of Trust recorded _______________.
Comment: If a notice of sale is filed, make reference to the notice after excepting to the deed of trust.

Standard Exception Subtopic

DTSX15

ALTA

10/10/2011
V 1

Additional Advance

An additional advance secured by the Deed of Trust recorded _________________, as disclosed by the instrument recorded _________________.
Comment: Do not insure a mortgage if it secures an additional advance reflected by subsequent instrument unless you except to intervening matters (including mechanics’ liens) that may have priority.

Standard Exception Subtopic

DTSX16

ALTA

10/10/2011
V 1

Subordinate Matters

Matters that affect the Title, but that are subordinate to the lien of the Insured Mortgage.
Comment: Use this exception in Schedule B of the Loan Policy if there are subordinate matters (e.g., liens or leases) and if you do not show those matters in Schedule B or Schedule B Part II.

Standard Exception Subtopic

DTSX17

ALTA

10/10/2011
V 1

Redemption

Rights of redemption in any owner, lienholder, or other party in interest for ____________ days from the foreclosure sale of the Land dated ____________ and recorded ____________.
Comment: Except to rights of redemption applicable under state law after foreclosure.

Standard Exception Subtopic

DTSX18

ALTA

10/10/2011
V 1

U.S. Redemption

Rights of redemption in the United States for one year from the foreclosure sale of the Land dated ____________ and recorded ____________.
Comment: In addition to federal tax liens creating U.S. redemption rights, a subordinate lien to the U.S. (e.g., by lien to SBA) may create redemption rights for one year after a nonjudicial foreclosure.

Standard Exception Subtopic

DTSX19

STG

10/10/2011
V 1

Trust Deed – Describes Note

Trust Deed from ____________ to ____________ for the benefit of ____________, recorded ____________ securing a note in the original principal sum of $__________ and other obligations described therein.
Comment: The deed of trust is sometimes called a trust deed. This exception describes the secured note. The Company prefers not to describe the note if possible.

See Underwriting Manual


Standard Exception Subtopic

DTSX20

STG

10/10/2011
V 1

Trust Deed – Does Not Describe Note

Trust Deed from ____________ to ____________ for the benefit of ____________, recorded ____________ securing the indebtedness and other obligations described therein.
Comment: The deed of trust is sometimes called a trust deed. This exception does not describe the secured note. The Company prefers not to describe the note if possible.

See Underwriting Manual


Standard Exception Subtopic

DTSX21

STG

10/10/2011
V 1

Partial Release

The following portion of the land has been partially reconveyed or released by the instrument recorded ____________________: _________________________.
Comment: This exception describes a partial release.

Standard Exception Subtopic

DTSX22

STG

10/10/2011
V 1

Bail Bond Deed of Trust

Bail Bond Deed of Trust from ____________ to ____________ for the benefit of _____________ recorded ____________ securing indebtedness in the original principal sum of $_______________ and other obligations described therein.
Comment: This exception describes a deed of trust that secures a bail bond. Do not insure a bail bond deed of trust without the Company’s approval.

See Underwriting Manual


Standard Exception Subtopic

DTSX23

STG

10/10/2011
V 1

Assignment

Assigned to ________________ by instrument recorded __________________.
Comment: This exception describes a complete assignment of the lien and note. Do not use if only a participation interest or collateral assignment is filed.

Standard Exception Subtopic

DTSX24

STG

10/10/2011
V 1

Assumption Agreement

By the terms of the instrument recorded _________________, the obligations secured by the deed of trust were assumed by ____________________.
Comment: Use this exception to describe an assumption agreement.

See Underwriting Manual


Standard Exception Subtopic

DTSX25

STG

10/10/2011
V 1

Nondisturbance

Terms and conditions of subordination, non-disturbance and attornment agreement, recorded __________.
Comment: A typical nondisturbance agreement allows the lessee to remain in possession after foreclosure. Therefore, it is appropriate to except to the terms of the agreement, whether shown in Schedule B or Schedule B Part II.

See Underwriting Manual


Standard Exception Subtopic

DTSX26

STG

10/10/2011
V 1

Failure of Spouse to Join

Any defect or invalidity of the Deed of Trust by reason of the failure of the spouse of the trustor/grantor to join in on the execution.
Comment: You must verify that a spouse with marital rights joins in a lien that may be insured or foreclosed.

See Underwriting Manual


Standard Exception Subtopic

DTSX27

STG

10/10/2011
V 1

Foreclosure Defect

Any defect or invalidity in the proceedings resulting in the Trustee’s Deed recorded ____________ due to any failure to comply with the provisions of applicable law or Deed of Trust including, but not limited to: _______________________.
Comment: The foreclosure must comply with both the deed of trust requirements and applicable law.

See Underwriting Manual


Standard Exception Subtopic

DTSX28

STG

10/10/2011
V 1

Servicemembers Civil Relief Act

Any claim based upon the Servicemembers Civil Relief Act (50 USC §§ 3901 - 4043), and any amendments thereto, which restricts foreclosure, forfeiture and other legal proceedings against persons based upon their military service in the uniformed services of the United States.

Comment: Use this exception in commitments and policies where the property to be insured is acquired out of a mortgage foreclosure, trustee's sale, or tax sale, if the foreclosed/forfeiting party is a person (including any form of joint tenancy, tenancy in common or tenancy by the entirety).

The above exception relates only to: (a) the acquisition of property by a foreclosing entity or taxing authority, and (b) the first sale to a third party purchaser following a foreclosure or forfeiture (including a simultaneous mortgage).

You may omit the above exception when underwriting a transaction subsequent to the first sale following a foreclosure or forfeiture, or where you are able to confirm that the foreclosed/forfeiting owner was never in military service, or as otherwise provided by our underwriting guidelines.


Standard Exception Subtopic

DTSX29

STG

10/10/2011
V 1

Assignment – Note Delivery

Impairment, loss or failure of title to the beneficial interest transferred to the insured is expressly excluded from the coverage hereof if 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: Use this exception on a Loan Policy insuring an assignment or on an assignment endorsement (which has no similar exception) unless the land is single family residence, the assignment is by and to an institutional lender, or you confirm the assignee is delivered an endorsed note. Always add the exception if there are multiple assignees.

Standard Exception Subtopic

DTSX30

STG

10/10/2011
V 1

Other Land Not Insured

The indebtedness secured by the lien of the insured mortgage described at No. 4 of Schedule A is further secured by property other than that described in No. 5 of said Schedule A, the title to such additional property not being insured hereby.
Comment: Use this note if the mortgage covers additional land not insured by the Loan Policy or another Loan Policy.

Standard Exception Subtopic

DTSX31

STG

10/10/2011
V 1

Reacquisition by Mortgagor After Foreclosure

The Deed of Trust recorded _____________, which was eliminated by foreclosure of a prior deed of trust, may be revived if title is reacquired by the mortgagor or related person.
Comment: If a subordinate lien is extinguished by a foreclosure of a prior lien and the mortgagor (or related party) may reacquire title, show the foreclosed subordinate lien since it may then be reinstated.

Standard Exception Subtopic

DTSX32

STG

10/10/2011
V 1

Part of Lien Insured

Deed of Trust from ___________ to ___________ recorded ___________ to the extent it secures indebtedness and obligations other than that note described in Schedule A.
Comment: With underwriter approval, the Loan Policy can insure the mortgage as it secures one but not all secured notes. The Policy must describe only one note in Schedule A (after describing the mortgage) and must except to the mortgage as it secures other debt.

Schedule A

Standard Exception Subtopic

DTSS01

STG

10/10/2011
V 1

Insured Deed of Trust (Secured Debt Described)

Deed of Trust executed by __________________ to ___________________, Trustee, dated __________________ and recorded _______________ securing the payment of one note of even date therewith payable to _______________, in the principal amount of $_____________.
Comment: This description refers to the secured indebtedness. Where possible, use the succeeding descriptions that do not recite the debt.

Standard Exception Subtopic

DTSS02

STG

10/10/2011
V 1

Insured Deed of Trust (Statement of Recited Deb

Deed of Trust executed by ____________ to _____________, Trustee, dated ________________ and recorded ________________ which states that it secures the payment of one note of even date therewith, in the principal amount of $_____________, payable to ___________.
Comment: This description is preferred to the previous Deed of Trust description.

Standard Exception Subtopic

DTSS03

STG

10/10/2011
V 1

Insured Deed of Trust (No Recital of Debt)

Deed of Trust executed by ________ to __________, Trustee, dated ________________ and recorded ________________ for the benefit of ___________.
Comment: This is the most preferred description of the Deed of Trust. It does not refer to specific debt.

Standard Exception Subtopic

DTSS04

STG

10/10/2011
V 1

Additional Security

For Informational Purposes Only: The indebtedness secured by the Deed of Trust is or may be additionally secured by _____________.
Comment: The Company prefers to describe documents such as UCCs or assignments of leases to the insured lender in a note or in Schedule B.

Standard Exception Subtopic

DTSS05

STG

10/10/2011
V 1

Modification

Modified by instrument dated _________________ and recorded _________________.
Comment: The Company prefers not to refer to the modification in Schedule A, but to except to it in Schedule B, unless the insured demands otherwise.

Standard Exception Subtopic

DTSS06

STG

10/10/2011
V 1

Assignment

Assigned to ___________________ by instrument dated ________________ and recorded _____________.
Comment: If the policy insures an assignment in Schedule A, add the exception to endorsement and delivery of the note unless the land is a single family residence and the assignment is by and to an institutional lender, or unless you confirm that the assignee is delivered an endorsed note.