Guideline: ALTA Endorsement 14.2 and 14.2-06 (Future Advance-Letter of Credit) W and WO/MML

Explanation:

This endorsement is designed for insurance of a mortgage securing a letter of credit or letter of credit reimbursement agreement.

This endorsement insures against (1) invalidity or unenforceability of the insured mortgage as security for Advances; (2) lack of priority of the lien of the insured mortgage as security for Advances; and (3) invalidity or unenforceability of the mortgage because of Re-Advances and repayments, lack of outstanding debt before an Advance, and failure to comply with legal requirements for Advances. Unlike ALTA Endorsements 14 and 14.1, this endorsement does not insure with respect to interest rate adjustments. Like ALTA Endorsements 14 and 14.1, this endorsement contains exclusions from coverage: real estate taxes and assessments, federal tax liens filed more than 45 days before the advance, federal or state environmental protection liens, and usury. Like other ALTA endorsements and policies, this endorsement does not insure the amount that may be recovered from a mortgagor or mortgagor's estate.We have two versions of the endorsement - one which contains a mechanic's lien exception (Endorsement 14.2 W/MML at paragraph 3.d) and the other which does not contain a mechanic's lien exception (Endorsement 14.2 WO/MML). This endorsement may be issued only on commercial transactions. Endorsement 14.2 is issued with a 1992 ALTA Loan Policy. Endorsement 14.2-06 is issued with a 2006 ALTA Loan Policy.

Underwriting Requirements:

We require the following:

1. Verify the mortgage (a) expressly secures reimbursement to the lender of Advances pursuant to a Reimbursement Agreement executed in connection with the issuance by the lender of an existing letter of credit, surety or other reimbursement obligation, and (b) complies with state requirements for disclosure of future Advances in Virtual Underwriter under 17.46.12 "Future Advance Forms to Use for Each State"

2. Verify the mortgage establishes a maximum time for Advances.

3. Verify the mortgage establishes a maximum amount of Advances.

4. Comply with our underwriting instructions for the applicable state set forth in Virtual Underwriter under 17.46 "Revolving Credit (Future Advance) Endorsements" and under 17.46.12 "Future Advance Forms to Use for Each State".

5. If the land is located in Alaska, Colorado, Illinois, Indiana, Maine, Missouri, Montana, Virginia, or Wyoming, issue the ALTA Endorsement 14.2 W/MML (with mechanic's lien exception), unless you secure underwriting approval to issue the ALTA Endorsement 14.2 WO/MML (without mechanic's lien exception). If the loan is made in connection with construction, issue the ALTA Endorsement 14.2 W/MML (with mechanic's lien). Otherwise, issue the ALTA Endorsement 14.2 WO/MML (without mechanic's lien exception).

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.