Bulletin: NJ2013001

Date:
April 15, 2013
To:
All New Jersey Issuing Offices
RE:
RATES AND/OR FORMS UPDATE - Revision and Adoption of NJ Forms effective 4-01-13 and Amendment to Rate Manual

Dear Associates:

The Commissioner of Banking and Insurance has approved revisions to the following forms Effective April 1, 2013:

1. The ALTA Short Form Residential Loan Policy - New Jersey Variation (NJRB 2-15) has been amended by incorporating language that seeks to clarify the scope and application of the endorsements that are included in the policy. Specifically the following endorsements have been modified: The ALTA 4.1-06 (Condominium) now states that the endorsement will apply if the land or estate or interest is referred to in the insured mortgage as a condominium. The ALTA Endorsement 6-06 (Variable Rate Mortgage) now has additional language that the endorsement will apply if the insured mortgage contains provisions which provide for an adjustable interest rate. The ALTA Endorsement 6.2-06 now states that the endorsement will apply if the insured mortgage contains provisions which provide for both an adjustable interest rate and negative amortization. The ALTA 30-06 (One to Four Family Shared Appreciation Mortgage) is now an additional endorsement that will be included by reference if the box is checked on Schedule A. Schedule B of the policy has also been modified: Number one (1.) on the schedule now states that taxes and assessments due and payable subsequent to the date of policy are excepted from coverage. The prior version of the form stated, “special” assessments; this language was removed. Schedule B is further amended to include, “other subsurface substances” within exception number four (4) and to add that nothing in the policy insures against damage resulting from “contamination, explosion, fire, fracturing, vibration, earthquake or subsidence.” 

2. The Secondary Mortgage Market Endorsement (NJRB 5-32) had a clerical error; the word, “title” should have stated, “total”. The limitation of liability paragraph now reads, “The total liability of the Company under said policy or certificate and under this and any prior endorsements thereto shall not exceed…..” 

3. ALTA Endorsement 9-06 Restrictions Encroachments Mineral - Loan Policy (NJRB 5-95) contained a clerical error where the paragraphs in Section 3 of the endorsement inadvertently omitted the letter “b”. The letters in the paragraphs are now sequential from “a” through “d”. 

4. ALTA Endorsement 14.3-06 Future Advance-Reverse Mortgage (NJRB 5-110) has been modified to correct a clerical error and make the word, “Indebtedness” lower case. 

5. ALTA Endorsement 3.2-06 Zoning - Land Under Development (NJRB 5-137) has had paragraph three amended to conform to the ALTA version of the endorsement. Paragraph 3 now states, “The Company further insures against loss or damage sustained by the Insured by reason of a final decree of a court of competent jurisdiction either prohibiting the use of the Land, with any existing Improvement, as specified in paragraph 2.b. or requiring the removal or alteration of the Improvement, because of a violation of, the zoning ordinances and amendments in effect at Date of Policy with respect to any of the following matters:” The coverage afforded by the endorsement remains the same. 

6. The ALTA Endorsement 9.8-06 Covenants Conditions and Restrictions - Land Under Development-Owners Policy (NJRB 5-140) has been modified by removing letter “d” from section 4 of the endorsement. This eliminates the exception for coverage in this endorsement for contamination, explosion, fire, vibration, earthquake or subsidence.

The New Jersey Department of Banking and Insurance has approved the adoption of the ALTA 37-06 Assignment of Leases or Rents (NJRB 5-155) Effective April 1, 2013. This endorsement provides coverage for: a. any defect in the execution of the Assignment of Rents or Leases Document or b. any assignment of the lessor's interest in any lease or leases or any assignment of rents affecting the Title and recorded in the Public Records at Date of Policy other than as set forth in any instrument referred to in Schedule B.The cost of the endorsement is 5% of the applicable underwriting charge with a $100.00 minimum. Section 10.90 has been added to the New Jersey Rate Manual to reflect the new form and charges.

Section 10.71 of the New Jersey Rate Manual has been amended to reflect the ALTA designation which was not previously referenced. The section now reads, “ALTA 30.1-06 Commercial Participation Interest Endorsement (New Jersey Variation)”. This change is effective April 1, 2013. 

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