Bulletin: AR2011004

Date:
October 19, 2011
To:
All Arkansas Issuing Offices
RE:
Insurability of Arkansas Statutory Foreclosures [Revised 10-24-11]

Dear Associates:  

Recently a United States Bankruptcy Court ruling in Arkansas has caused us to rethink our non-judicial foreclosure underwriting requirements. In essence, the Bankruptcy Court has said that Ar. Code Ann.  §18-50-117 limits the utilization of Statutory Foreclosures to entities or individuals authorized to do business in Arkansas. We will no longer insure after a non-judicial foreclosure unless the lender doing the foreclosure holds a current Certificate of Authority and has an active Certificate of Good Standing in Arkansas. It is not sufficient for the lender to appoint the trustee as agent and attorney in fact under a power of attorney. The Date of the Certificate must pre-date the beginning of the foreclosure. The Arkansas Secretary of State website can provide you with a Certificate of Good Standing.  See the secretary of state’s website at: https://www.ark.org/sos/good_standing/index.php.  

As stated on the Secretary of State’s web page, "A Certificate of Good Standing is a certificate issued by the Arkansas Secretary of State certifying that a corporation or company is at this time qualified and in good standing, having met all the requirements governing this type of corporation or company in the state of Arkansas."  In other words, you cannot obtain a Certificate of Good Standing unless the Certificate of Authority has been granted.

An alternative approach would be to obtain proof of an Arkansas State Banking Department Certificate of Authority for an out of state bank.  You may check the department’s website at http://www.state.ar.us/bank/Authority.html for the listing of the out of state banks currently having authority. There appear to be 17 banks listed as of the date of this bulletin.

If the case is overturned by appeal, we will revise this bulletin and provide an update.

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.

THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

References

Bulletins Replaced:
None
Related Bulletins:
None
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
None