Bulletin: CT2011001

Date:
November 07, 2011
To:
All Connecticut Issuing Offices
RE:
Non-acquisition Loan Rate

Dear Associates: 

A SIMPLIFIED, LOWER RESIDENTIAL LOAN POLICY RATE TOOK EFFECT September 1, 2011. 

We are pleased to announce the implementation of a new, lower rate structure that will apply to residential refinance transactions and to certain other residential loans as well. The rate became effective on September 1, 2011. 

The discounted rate, calculated at sixty percent (60%) of the full loan policy rate, will apply anytime you issue a loan policy that insures a mortgage on a one-to four-family residential property other than a purchase-money mortgage, a reverse mortgage, or a construction mortgage.  

The limitation in refinance transactions that the loan being paid off must be less than ten years old no longer applies; the discounted rate is now available regardless of the age of the paid-off loan. Further, the discounted rate will now apply to the entire amount of the new loan policy, not just up to the original amount of the paid-off loan. Finally, it will no longer be the case that the discount applies only if ownership of the property is unchanged and the same property is being mortgaged. 

Please note that the new rate does not apply to loan policies insuring a mortgage on commercial property. Such transactions will still benefit from the rate discount of forty percent (40%), but the limitations applying previously to all refinance transactions will still apply, e.g., the loan proceeds must be used to pay off an existing mortgage, and the paid-off mortgage must be less than ten years old. 

Examples of how the new rate will affect certain common transactions follow.  

Your software rate calculators will soon be modified to incorporate the new rate. 

Please call us with any questions you may have about the new rate outlined above, and we will be happy to assist you. The main number at Stewart's Hartford office is 1-860-838-4740, and the Fairfield office's main number is 1-203-338-8575.  
 

Example 1. 

New loan for $200,000 secured by a mortgage on a one- to four-family residential property. Proceeds will pay off an existing loan from 2005 whose original amount was $170,000.
 

Old rate:

The transaction qualifies for the refi discount of forty percent (40%), the paid-off mortgage being less than ten years old, but only to the extent of the original amount of the paid-off mortgage ($170,000). The full loan policy premium rate would be charged on the excess over $170,000.

New rate:

The age of the paid-off mortgage does not matter, nor does the fact that the new loan amount exceeds the paid-off loan amount. The discount of forty (40%) is applied to the full amount of the new mortgage, $200,000.

Example 2. 

New loan for $200,000 secured by a mortgage on a one- to four-family residential property. Proceeds will pay off an existing loan from 1998 whose original amount was $170,000.
 

Old rate:

Because the mortgage being paid off is more than ten years old, the refi discount of forty percent (40%) was not available. The full loan policy premium rate on a mortgage of $200,000 would be charged.
 

New rate:

The age of the paid-off mortgage does not matter, nor does the fact that the new loan amount exceeds the paid-off loan amount. The discount of forty (40%) is applied to the full amount of the new mortgage, $200,000.
 

Example 3. 

New loan for $200,000 secured by a mortgage on an unimproved lot in a residential subdivision, with proceeds being used for construction of a dwelling.
 

Old rate:

Because the proceeds of the new mortgage are not being used to pay off an existing mortgage, the refi discount rate was not available.
 

New rate:

No change.The new rate is not available on new-construction loans.
 

Example 4. 

New loan for $2,000,000 secured by a mortgage on commercial property. Loan proceeds will be used to pay off existing mortgage of $1,500,000.
 

Old rate:

Refi rate discount of forty percent (40%) applies to the first $1,500,000 of the new loan. Full loan rate charged on excess of $500,000.
 

New rate:

No change.The new rate is not available for policies insuring mortgages on commercial properties.
 

Example 5. 

New loan for $200,000 secured by a mortgage on a one- to four-family residential property granted by Blackacre, LLC, the current owner of the property, which acquired the property from Bob Blackacre in 2010. Loan proceeds will be used in part to pay off existing mortgage of $170,000 granted in 2007 by Bob Blackacre, the former owner.
 

Old rate:

Because Bob Blackacre had quitclaimed the property to his LLC after mortgaging it, the refi discount of forty percent (40%) was not available. The full loan policy premium rate on a mortgage of $200,000 would be charged.
 

New rate:

It does not matter that there has been a change in ownership, nor does it matter that the new loan amount exceeds the paid-off loan amount. The discount of forty percent (40%) is applied to the full amount of the new mortgage, $200,000.
 

Example 6. 

New equity line of credit for $100,000 secured by a mortgage on a one- to four-family residential property.
 

Old rate:

Because the proceeds of the new mortgage are not being used to pay off an existing mortgage, the refi discount rate was not available.
 

New rate:

The fact that no proceeds are being used to pay off an existing mortgage does not matter. The discount of forty (40%) is applied to the full amount of the new mortgage, $100,000.

 

Issuing Agents using AIM for Windows should contact Property Info Customer Care to get the CPL fees implemented in their AIM system.

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.

References

Bulletins Replaced:
None
Related Bulletins:
None
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
None