NM Short Form Residential Loan Policy 63

Explanation:

The Short Form Loan Policy expedites policy delivery and reduces errors. The Short Form Loan Policy incorporates the Conditions and Stipulations, the Exclusions, the marked endorsements, and the legal description of the insured mortgage. You do not need to show exceptions to restrictions, easements, and minerals on this policy.
You should issue the Short Form Residential Loan Policy - One-to-Four Family (NM 63) on One to Four Family Residential Property, if the lender instructions authorize the policy.

Underwriting Requirements:

Date of Policy: Put the date of settlement in the blank on Schedule A for the Date of Policy. The Policy then says that the effective date is the later of that date or the date of recording. That means the Short Form Loan Policy gives "gap coverage" between your date of examination and the date of recording. You do not need to await recording information, if this is acceptable to your insured so long as you are in position to disburse. Tell the lender that this will speed up delivery of the policy to them so they can deliver their loan immediately into the secondary market. If your lender objects please send an email to customerservice@stewart.com and we will send the Fannie Mae guidelines to the lender and if necessary initiate a conference call with the lender to explain the benefits of this policy.

Record Mortgage: You must still file for record the mortgage the same day you issue the policy or at the latest, first thing the next morning or business day. We advise that you establish a procedure for recording twice a day, if practical in your area.

Rates for the Short Form: You charge the normal rates (including any credit or reduced rate) on Loan Policies for (1) issuance of this Policy and (2) the endorsements that you mark and (3) the deletion of standard exceptions.

Search of Title for the Short Form: You must perform a general index search for the time period of the statute of limitations on judgments (14 years under State law), and for the time period of the limitations on Federal judgments (20 years) and Federal tax liens (10 years). You must check taxes, assessments of all types, and other governmental charges. You should be satisfied that there are no recent unpaid bills for improvements. An affidavit is satisfactory unless you have other indications of work having been done.

If you issue the Policy on a first lien and you have a prior title policy (owner's, loan or short form), search from (1) prior policy or (2) one bona fide (not gift or intrafamily) deed and institutional loan back. If you do not have a prior policy, search for two bona fide deeds back (but do your normal search if you also issue a simultaneous Owner's Policy).

If you issue the Short Form Loan Policy on a subordinate lien, search one (1) bona fide deed and institutional loan back (but do your normal search if you also issue a simultaneous Owner's Policy).

First Lien and Subordinate Lien Insured on Short Form Loan Policy: The Short Form Loan Policy may insure a first lien or subordinate lien.

The Short Form Loan Policy may insure a first lien. If there is a subordinate lien (and you insure the first mortgage), you should attach a Schedule B, Part II and show the subordinate lien.

You also may insure a second lien by the Short Form Loan Policy: just X "Addendum Attached," and show the first mortgage as an exception on the Addendum.

Type of Property Covered by Short Form Loan Policy: You may issue the Short Form Loan Policy only on Fee Simple. You may not issue the Short Form Loan Policy on a Leasehold. Issue the Policy only on One to Four Family Residential Property. There is no acreage limit on Residential Property.

What Does Short Form Loan Policy Say: The Short Form Loan Policy is an actual policy. There are two sides to the Policy: Schedule A and Schedule B. The first paragraph above Schedule B incorporates the terms of the Loan Policy (NM 2) without reprinting those terms. That shortens the Policy. You do not need to attach a Loan Policy jacket to this Policy, since it is an individual Loan Policy, complete with Schedules A and B.

Schedule A Information:

Amount of Insurance: This should be the mortgage amount.

Premium: This is your normal premium charge for any regular Loan Policy (NM 2), plus any premium bearing endorsements checked and any premium for deletion of standard exceptions.

File Number: Use your own numbering system for this number.

Loan Number: This is the loan number, if any, given to you by the lender.

Mortgage Amount: This is the amount of the mortgage debt.

Mortgage Date: This is the date the mortgage was executed.

Policy Number: You do not need to complete if you use our printed form.

Date of Policy: "____ or date of recording of insured mortgage, whichever is later." You add the date of settlement in the blank, unless the lender's instructions say otherwise. This provision automatically gives "gap" coverage.

Name of Insured: This is the lender, or the assignee if the assignment is recorded contemporaneously. You may add: "ABC Mortgage Company, its successors and assigns" or similar language requested by the lender.

Name of Borrower(s): The borrowers are the parties who execute the mortgage.

Property Address: This should be the actual address of the land covered by the mortgage and actually shown in the mortgage. If the mortgage has a mailing address for the land (such as a route), you may use that mailing address. The policy does not contain a legal description, but incorporates the description contained in the mortgage. Do not use the address shown on the mortgage if you believe that it is incorrect. You will, of course, still search the title to the property as it is legally described in the documents and as found in the public records.

County and State: Here add New Mexico and the county in which the land is located.

Addendum attached: Check this box only if you add an Addendum.

Endorsements incorporated: You do not attach endorsements. You simply mark the applicable choice and charge for the endorsement if it is premium bearing. You may incorporate any of the endorsement boxes if you verify that our guidelines for those endorsements have been met. The Endorsements available are NM Form 12 (ALTA 4) Condominium Endorsement, NM Form 13 (ALTA 5) Planned Unit Development Endorsement, NM Form 14 (ALTA 6) Variable Rate Endorsement, NM Form 15 (ALTA 6.2) Variable Rate?Negative Amortization Endorsement, NM Form 16 (ALTA 7) Manufactured Housing Unit Endorsement, and NM Form 29 (ALTA 8.1) Environmental Protection Lien Endorsement - no exceptions to state statutes are required in our Short Form.

Schedule B Information:

Taxes (Paragraph 1): Do your normal search. You should verify the land is not specially assessed according to your tax search/review. The Short Form Loan Policy excepts only to taxes "due and payable subsequent to Date of Policy" - you should verify all taxes that are payable have been satisfied.

Restrictions (Paragraph 2): You do not need to add exceptions in the Addendum to restrictions, easements or minerals. They are generally excepted in the pre-printed Schedule B of the Short Form Loan Policy. The Policy also provides affirmative insurance as to those items. Verify the property owner' association assessments are paid current, unless subordinate to the lien of the insured mortgage.

Easements (Paragraph 3): You do not need to add exceptions in the Addendum to specific easements. You do not need to add exceptions in the addendum to encroachments. We are willing to insure against encroachments and interference with improvements by easements.

Minerals (Paragraph 4): You do not need to add exceptions in the Addendum to specific mineral reservations or leases. You do not need to require surface waivers of outstanding minerals. You may give this promulgated standard coverage if there are minerals outstanding without surface waivers, unless you actually know (without further investigation) that there is use of the surface for mineral development in the immediate area.

Survey Matters (Paragraph 5): You may rely upon a recent survey. You do not need to add exception in the Addendum to encroachments, other than a pipeline or sewer line under the house or encroachment of the house onto adjoining land.

Arbitration (Paragraph 6): This paragraph waives the right to demand arbitration. NMAC 13.14.18.10 D. You do not need to add an additional exception in the policy deleting arbitration.

Water Rights (Paragraph 7): This paragraph excepts to water rights. If Standard Exception 7 is omitted, this paragraph remains in the Short Form Loan Policy as Paragraph 7.

Addendum: Attach the Addendum only if you add special exceptions (such as a recorded environmental notice or a lis pendens). You do not need to except to easements, minerals or restrictions in the Addendum. You do not need to add exceptions for minor encroachments. If you add an Addendum, you must be sure it is acceptable to the lender. Otherwise, you may not issue the Policy. If any Standard Exceptions are not deleted, they will be shown in the Addendum.

Standard Exceptions: NMAC 13.14.7.8 provides that the Short Form Loan Policy must contain the Standard Exceptions (NMAC 13.14.5.9) in the Addendum unless applicable premium is paid and requirements are satisfied. We anticipate that institutional lenders will require that (1) an Addendum not be attached, and (2) the Standard Exceptions not appear in the policy. In order to issue the Short Form Loan Policy on a first lien mortgage without the Addendum or Standard Exceptions, we must comply with the following requirements:

  • 1. Standard Exception 1 -"Rights or claims of parties in possession not shown by the public records." You may omit this exception based upon an affidavit or recent survey showing that there are no parties other than the mortgagors in possession. NMAC 13.14.7.11.
  • 2. Standard Exception 2 - "Easements, or claims of easements, not shown by the public records." You may omit this exception based on a survey showing no easements other than easements in the public records. NMAC 13.14.7.12.
  • 3. Standard Exception 3 - "Encroachments, overlaps, conflicts in boundary lines, shortages in area, or other matters which would be disclosed by an accurate survey and inspection of the premises." You may omit this exception in its entirety (and not except to "shortages in area") based on a recent survey showing no pipeline or sewer line under the residence and showing no encroachment of the residence over the property line. You do not need to except to other encroachments in the Addendum. NMAC 13.14.7.13.
  • 4. Standard Exception 4 - "Any lien, claim or right to a lien, for services, labor or material heretofore or hereafter furnished, imposed by law and not shown by the public records." The Short Form Loan Policy may not insure a construction loan mortgage. NMAC 13.14.7.8 C. You may omit this exception if you secure evidence (e.g. an affidavit of the mortgagors) that no work, materials or improvements have been added to the land within 120 days, and you confirm no mechanic's lien has been filed. NMAC 13.14.7.13. Because the insured mortgage may not be a construction mortgage, you will not charge for insurance of priority. NMAC 13.14.9.40.
  • 5. Standard Exception 5 - "Community property, survivorship, or homestead rights, if any, of any spouse of the vestee (in a Loan Policy)."You may omit this exception if (1) the vestee is a corporation, partnership, other artificial entity, or person holding as trustee, or (2) both spouses sign the mortgage, or (3) the owner is a single person. NMAC 13.14.7.15.
  • 6. Standard Exception 6 - "Any rights or titles asserted by anyone including, but not limited to, persons, corporations, governments, or other entities, to lands comprising the shores or bottoms of navigable streams, lakes, or land beyond the line of the harbor or bulkhead lines established or changed by the United States Government." You may omit this exception based upon a survey that does not disclose streams, lakes, arroyos or ponds on the land. NMAC 13.14.7.16. You must charge $25 premium to omit this exception from the Short Form Loan Policy. NMAC 13.14.10.29.
  • 7. Standard Exception 7 - "Unpatented mining claims, reservations or exceptions in patents or in acts authorizing the issuance thereof, water rights, claims or title to water." You may omit this exception without taking additional action. NMAC 13.14.7.24. You do not need to add exception in the Addendum to "water rights, claims and title to water," because that exception appears as Paragraph 7 of Schedule B. You must charge $25 for omitting Standard Exception 7 from the Short Form Loan Policy (but do not delete Paragraph 7 of Schedule B of the Short Form Loan Policy). NMAC 13.14.10.35.
  • 8. Standard Exception 8 - "Taxes or assessments which are not shown as existing liens by the public records." You may omit this exception based upon your regular tax search and payment of all taxes and assessments due and payable. NMAC 13.14.7.25. You must charge $25 premium to omit this exception from the Short Form Loan Policy. NMAC 13.14.10.46.
  • 9. Standard Exception 9 - "Taxes for the year ___, and thereafter." This exception is similar to Paragraph 1 of Schedule B of the Short Form Loan Policy, and is unnecessary. You should secure your regular tax search and pay all taxes and assessments that are due and payable. You may omit this exception from the Short Form Loan Policy. NMAC 13.14.7.8 C(1).

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):

NM Form 63 Short Form Residential Loan Policy (ALTA Form Rev. 12-3-12)