Bulletin: SLS2009014

Date:
October 19, 2009
To:
All Issuing Offices
RE:
Mortgages/Deed of Trusts to Multiple Individual Mortgagees

Dear Associates:

Insurance of a mortgage assignment to individuals (natural persons) of a fractional share or interest in a note and mortgage is an extra-hazardous risk.

1. You should not insure an assignment of fractional shares or interests in a note and mortgage either by an assignment endorsement or by a Loan Policy that describes the mortgage assignment in Schedule A unless you comply with this Bulletin or unless you secure Senior Underwriter approval.

2. If the total number of individual owners of fractional interests in a note and mortgage is less than 10, you may describe the assignment in the assignment endorsement available in your state, or in the loan policy that refers to the fractional interests, if the policy or endorsement contains the following Note Exception or similar exception (such as the exception in the California Land Title Association Endorsement 104.10 or in the Texas Assignment Endorsement):

Any claim because (1) the note or notes secured by the lien of the Insured Mortgage have not been properly endorsed and delivered to the Insured, or (2) if the note or notes are transferable records, the insured does not have "control" of the single authoritative copy of each "transferable record" as these terms are defined by applicable electronic transactions laws.

3. If the total number of individual owners of fractional interests in a note and mortgage is 10 or more, you may describe the mortgage and assignment in the assignment endorsement available in your state, or in the loan policy that refers to the fractional interests, if (1) the policy contains the above or similar Note Exception, and (2) you secure Senior Underwriter approval, and (3) you also include the following Securities Exception in the Endorsement or Loan Policy:

Any claim, allegation or determination that the beneficial interest insured herein, or the underlying transaction involves the sale of a Security and/or is in violation of State or Federal Securities Laws.

4. If the total number of individual owners of fractional interests in a note and mortgage is 10 or more where no assignment is being made, you may describe the mortgage in the loan policy that refers to the fractional interests, if (1) the policy contains the above or similar Note Exception, and (2) you secure Senior Underwriter approval, and (3) you also include the following Securities Exception in the Endorsement or Loan Policy:

Any claim, allegation or determination that the beneficial interest insured herein, or the underlying transaction involves the sale of a Security and/or is in violation of State or Federal Securities Laws.

5. When you review the identified fractional interests in the note and mortgage, you should determine that the total equals 100%.

This bulletin does not apply to spouses, civil unions, or similar relationships and fractional interests owned only by such parties, or to participation agreement between institutional lenders.

This bulletin does apply to guarantees and assureds.

Guidelines for appropriate assignment endorsements should be reviewed.


 

Guideline: ALTA Endorsement 10 and 10-06 (Assignment) (Click to View)

 


If you have questions relating to this bulletin, please contact Stewart Legal Services or your local underwriting personnel.

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.