Bulletin: TX000064

Date:
October 21, 2002
To:
All Issuing Offices in Texas
RE:
New Rates and Rules; Commissioner's Order for 2000 Hearing; Junior Mortgagee Policy

Dear Associates:

The Commissioner adopted new Rates and Rate Rules effective November 1, 2002. Our prior bulletins TX000061 and TX000062 discuss the forms adopted and our guidelines.

First Loss Endorsement - Rate Rule R-11.i

Rate Rule R-11.i provides that the Rate for the First Loss Endorsement (T-14) to the Mortgagee Policy (T-2) on non-residential real property is $25 for each endorsement.

Last Dollar Endorsement - Rate Rule R-11.j

Rate Rule R-11.j provides that the Rate for the Last Dollar Endorsement (T-15) to the Mortgagee Policy (T-2) on non-residential real property is $25 for each endorsement.

Mortgagee Policy Aggregation Endorsement - Rate Rule R-11.k

Rate Rule R-11.k provides that the Rate for the Mortgagee Policy Aggregation Endorsement (T-16) to the Mortgagee Policy (T-2) is $25 for each endorsement.

Planned Unit Development Endorsement - Rate Rule R-11.l

Rate Rule R-11.l provides that the Rate for the Planned Unit Development (PUD) Endorsement (T-17) to the Mortgagee Policy (T-2 or T-2R) on Residential Real Property is $25. If the Company issues the PUD Endorsement on two or more Mortgagee Policies simultaneously covering the same land, then the premium is charged only for one PUD Endorsement.

Restrictions, Encroachments, Minerals Endorsement - Rate Rule R-29

Rate Rule R-29 provides that the Rate for the Restrictions, Encroachments, Minerals Endorsement (T-19) to the Mortgagee Policy (T-2 or T-2R) is (1) the greater of $25 or 5% of the Basic Rate on Residential Real Property, or (2) the greater of $25 or 10% of the Basic Rate on other real property.

For example, the Basic Rate for Mortgagee Policy of $100,000 will be $932 on and after November 1, 2002. The Premium for the Restrictions, Encroachments, Minerals Endorsement (T-19) on a Mortgagee Policy for $100,000 covering Residential Real Property will be $47 (rounded to the nearest dollar). The Premium for the Restrictions, Encroachments, Minerals Endorsement (T-19) on a Mortgagee Policy for $100,000 covering non-residential real property will be $93 (rounded to the nearest dollar).

Texas Residential Limited Covered Junior Mortgagee Policy - Rate Rule R-27

Rate Rule R-27 provides that (1) the Rate for the Junior Mortgagee Policy (T-44) is $150 if not more than $10,000, $175 if more than $10,000 and not more than $50,000, and $200 if more than $50,000 and not more than $100,000. The Junior Mortgagee Policy may be issued only on "residential property," which is real property with improvements designed principally for the occupancy of from one to four families (including individual units of condominiums and cooperatives) that (1) is located in a platted subdivision of record, or (2) consists of five acres or less.

The Rate for the Texas Residential Limited Coverage Junior Mortgagee Policy Additional Coverage Endorsement is $25.

The Rate for the Texas Residential Limited Coverage Junior Mortgagee Policy Down Date Endorsement (T-45) is $50.

The Rate for the Texas Residential Limited Coverage Junior Mortgagee Policy Variable Rate Endorsement (T-46) is $25.

Guidelines for issuance of these forms are set forth in Exhibit 1.

You may secure copies of these forms from Stewart Forms and Information.

Amendment of Area and Boundaries Exception - Rate Rule R-16

Rate Rule R-16 provides that the Rate for the Owner Policy (T-1) "area and boundary" coverage is 15% of the Basic Rate. Rate Rule R-16 as amended provides that the charge for "area and boundary" coverage on a Residential Owner Policy (T-1R) (covering Residential Real Property) is 5% of the Basic Rate.

We recommend that you expressly explain this coverage on all residential transactions contemplating issuance of a Residential Owner Policy (T-1R) by Note in the Commitment and "Boundary Protection Election" Disclosure at closing. See recommended Note and Disclosure in Exhibit 2. You are not required to use the Note or Disclosure.

Tax-Deferred Exchanges

Amended Rule R-2 provides that a policy issued when a qualified intermediary takes title shall name the ultimate owner, or ultimate owner and qualified intermediary as insureds. This approach does not update the policy upon the conveyance to the ultimate owner.

We recommend that the Owner Policy (T-1) contain as the names of the insureds, the following language: "Jane Smith, (insert "trustee", "on behalf of", or "qualified intermediary" " whichever is acceptable to the parties), and John Doe, as their interests may appear."

We recommend that the Residential Owner Policy (T-1R) contain as the names of the insured, the following language: "Jane Smith, (insert "trustee", "on behalf of", or "qualified intermediary" " whichever is acceptable to the parties), and John Doe, as their interests may appear."

Supplemental Coverage Manufactured Housing Unit Endorsement - Rate Rules R-11.e and R-15
Amended Rate Rule R-11.e provides that the Rate for the Supplemental Coverage Manufactured Housing Unit Endorsement to the Mortgagee Policy (T-2 or T-2R) is $50. Amended Rate Rule R-15 provides that the Rate for the Supplemental Coverage Manufactured Housing Unit Endorsement to the Owner Policy (T-1 or T-1R) is $50. If the Endorsements are issued for both and Owner Policy and a simultaneous Mortgagee Policy, charge a total premium of $100 for the Endorsements.

Basic Rates

The Basic Rates are reduced by 6%. The new Minimum Promulgated Basic Rate will be $254. The fixed rate charges, such as the simultaneous rate charge of $100 and the Environmental Protection Lien Endorsement charge of $50, have not been changed.

Copies of the new Rates are set forth in Exhibit 3.

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:
TX000061 Commissioner's Order for 2002 Hearing
 
TX000062 Area and Boundary Exception; Commissioner's Order for 2000 Hearing
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
None