NM Additional Advance Endorsement Guideline 25

Explanation:

An Additional Advance Endorsement (NM 25) may be attached to a Loan Policy insuring an open-ended mortgage to insure the validity and priority of the lien of the additional advance.  An open ended mortgage is a mortgage which provides that the lender may make additional principal advances subsequent to the date of recordation of the mortgage, which advances will obtain the priority as of the recording date of the original mortgage.

 

Underwriting Requirements:

We require the following:

1. In order to insure the priority of such advances, the mortgage must comply with Section 48-7-9 NMSA 1978 which states:

"Mortgages; future advances; lien. Every mortgage or other instrument securing a loan upon real estate and constituting a lien, or the full equivalent thereof, upon the real estate securing such loan, may secure future advances and the lien of such mortgage shall attach upon its execution and have priority from the time of recording as to all advances, whether obligatory or discretionary, made thereunder until such mortgage is released of record; provided that the lien of such mortgage shall not exceed at any one time the maximum amount stated in the mortgage."

Consequently, before issuing the endorsement, be sure that the mortgage clearly and expressly states:

(a) that all mortgage secures future advances (apart from those advances paid solely to provide security for the collateral, such as payment of taxes, and insurance premiums), and

(b) a maximum amount.

2. A Modification of Mortgage or Modification Agreement is properly executed and recorded. A NM 11 - Multipurpose Endorsement shall be issued pursuant to 13.14.8.8D NMAC on the recorded modification document as a loan modification endorsement.

3. The endorsement premium shall be $25.00 plus an additional premium calculated by determining the difference between the charge for a loan policy in the amount of the unpaid principal balance due to the lender before the advance is made and the charge for a loan policy in the amount of the principal balance due after the advance has been made utilizing the appropriate brackets in the Schedule of Basic Premium Rates in effect as of the date of the endorsement. The minimum combined charge for this endorsement is $50.00.

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 25 Additional Advance Endorsement