T-38 Guideline - TX Partial Release, Release of Additional Collateral, Modification Agreement, Reinstatement Agreement, or Release from Personal Liability Endorsement

Explanation:

When presented with the request for a modification endorsement T-38 it is important to read the proposed agreement.  The matters shown immediately above are known to lender counsels who frequently try to avoid their application by the vehicle of “restating” the note or deed of trust.  We believe that restating individual terms may allow the T-38 endorsement, but a wholesale revision of the loan documents by restating each of the individual terms  (even if no changes are being made)  may amount to a new document and would thus be a new transaction. When reading such documents, any uncertainty should be resolved by consultation with an underwriter to whom you have furnished the documents.

Note that while there is a prohibition against “new money” in subparagraph  (iii) above,  accrued and unpaid interest and sums advanced to protect the collateral such as taxes, insurance and repairs, do not constitute new money and the endorsement may be given in such circumstances.

This T-38 Modification Endorsement does not bring the title current nor does it change the effective date of the policy.  No search of the title since the policy date is required other than to obtain the recording information on the modification documents (which must be added to the endorsement). 

Be sure to collect the appropriate premium as required by R-11b.

Please also see P-9b(3) for more information regarding this endorsement. 

For further guidance, refer to the applicable subsections in Section 11.04 of the National Underwriting Manual on Virtual Underwriter http://www.vuwriter.com/vumanuals.jsp?displaykey=UM00000208

Underwriting Requirements:

(1) This endorsement may be issued upon execution of a partial release if value is paid or if the release is executed pursuant to the Deed of Trust release provisions.
(2) This endorsement may be issued when the underlying lien has been modified if no new note or mortgage is executed, if there is no new principal other than the original contemplated advances, and if no new land is added as collateral.
(3) This endorsement may be issued if the underlying lien is subordinated and we determine that there are no other liens except the lien covered by the subordination and there is no current construction.
(4) This endorsement does not down date the policy. It also does not insure the continued priority of the mortgage or subsequent advances.
(5) The premium charge for this endorsement is $100 if issued within one year from the date of the original policy date. An additional $10 is charged for every year thereafter. The premium charged for the endorsement cannot exceed 50% of the rate charged for the original mortgagee policy.

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.