Guideline: ALTA Residential Limited Coverage Mortgage Modification Policy (12-01-14)

Explanation:

This policy insures the lender against loss or damage by reason of: (1) the invalidity or unenforceability of the lien of the Insured’s Mortgage upon the Title at Date of Policy as a result of the Modification, and (2) the loss of priority of the lien of the Insured’s Mortgage, at Date of Policy, over any defects in or liens or encumbrances on the Title as a result of the Modification.  This policy includes Exclusions with respect to (1) matters not recorded or filed in the Public Records at Date of Policy, (2) creditors’ rights claims arising out of the transaction creating the Modification, and (3) the status or ownership of the Title.

This policy is intended for a modification of institutional mortgages insured as having first priority where the original lender and borrower are the same and no new principal is secured.

Underwriting Requirements:

(1) Applicability: This policy should not be issued unless:

    (a) the prior mortgage was insured by a Loan Policy, whether or not issued by the Company.  You should obtain a copy of the prior Loan Policy;

    (b) the current owner/mortgagor is the same as the mortgagor named in the mortgage;

    (c) the lender is an institutional lender and is the same as the mortgagee named in the mortgage (i.e., there has been no change of ownership of the loan); and

    (d) the property is a 1-4 family owner-occupied residence (including an owner-occupied residential condominium unit) encumbered solely by an institutional mortgage insured as having first priority.

(2) Searches:

    (a) You must search the public records from the date of recording of the mortgage to the Date of Policy, including a customary name search of the owner/mortgagor in the public records.

    (b) You do not need to perform a current tax and assessment search.

(3) If your search discloses any of the following, do not issue this policy without Underwriter approval:

    (a) any intervening matters such as mortgages, mortgage modifications, liens, covenants or easements, etc., between the recording of the mortgage and the Date of Policy;

    (b) a notice of bankruptcy by the owner/mortgagor;

    (c) a partial or full release, reconveyance or discharge of the mortgage; or

    (d) that the record mortgage holder is not the current lender on the Modification.

(4) Do not issue this policy if the mortgage as modified secures:

    (a) additional property;

    (b) a lease; or

    (c) a new or restated mortgage.

(5) Unless otherwise approved by an Underwriter, the Amount of Insurance for this policy must be the lesser of:

    (a) the amount stated in the mortgage (i.e., there should be no increase in the principal amount secured by the mortgage as modified); and

    (b) the current unpaid balance.

(6) The Modification must be in recordable form, and it must be recorded.

(7) In jurisdictions where there is a mortgage tax, confirm that the mortgage tax calculation appears to be correct and that the appropriate amount of mortgage tax, if any, was paid at the time of recording of the Modification.

(8) Do not issue this policy if a subordination was required in connection with the issuance of the prior Loan Policy for the mortgage, unless the subordinated mortgage has been released or you obtain Underwriter approval.

(9) This policy does not require a property description.  Complete Schedule A by inserting a description of the mortgage (title, parties, date, recording information) and the Modification (title, parties, date, recording information).  This policy is not designed to contain a Schedule B.

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.