NY TIRSA Cluster Endorsement Guideline 1995


Purpose Of Endorsement:
This endorsement is usually used in sophisticated multistate or intrastate multiproperty transactions where separate policies have been issued, and the lender wants to aggregate, or “cluster” the policies together to provide a single coverage. Loss on any of the clustered policies can exceed the face of the coverage attributable to the individual site.
The New York-approved version carves out an exception which limits endorsement in New York State to the amount on which mortgage tax has been paid.
Note: While the Cluster Endorsement will usually be requested and issued with a First Loss Endorsement, there is confusion as to whether the Cluster Endorsement can be issued alone. The 12/1/94 TIRSA Commentary explaining this endorsement erroneously stated that “the Cluster Endorsement must be issued with a First Loss Endorsement and cannot be issued without issuance of a First Loss Endorsement”. This contradicts other criteria (First Loss is ostensibly “only effective in a multiple site New York transaction” while Cluster is “only usable in a multiple site deal but can cover sites outside and inside New York”). A clarification is in the works resolving the conflict. Until the contradictions are resolved, you may issue the Cluster Endorsement alone, if requested.

Underwriting Requirements:

Requirements For Issuance:
(a) Underwriter approval is required prior to issuance in every case (this is a requirement of the New York State Insurance Department;
(b) All policies to be clustered must be issued by the same underwriter, and all policies must be issued on the 1992 ALTA Loan Policy form;
(c) Loan documents must be reviewed by Company underwriting counsel:
(1) If a multistate deal is involved, the mortgages covering New York sites cannot contain a statement that the mortgage secures the entire indebtedness. Tie-In or cluster-type endorsements usually require such a statement. If New York property is involved, a mortgage recording tax problem can occur if such a statement is included. Aggregation of the debt is only permitted for intrastate transactions (i.e., wholly within New York) or for the New York portions of multistate transactions.
(2) Cross default provisions must be in the loan documents.
Issued With The Following Policies:
Applicable to loan policies only.

The underwriting guidelines contained herein have been provided for general reference. The facts, circumstances, and location of the subject property should be considered when determining the issuance of the requested form or endorsement. Please note that all of the forms and endorsements included in this system may not be available in all states. Accordingly, please contact the appropriate Stewart Title Guaranty Company underwriting personnel in order to determine availability.

Compliance with the underwriting guidelines contained herein in no way obligates Stewart Title Guaranty Company to issue any form or endorsement.

This guideline applies to the following form(s):