Generally, when providing financing without security on the land, the "Rural Electrification Association" requires its borrowers to obtain owner's title insurance policies as evidence of their titles.
"REA" also requires the following:
- The commitment must provide that the title insurance policy will contain
the following provision: "The settlement of any claim filed pursuant to this
policy shall be made subject to the written approval of the United States
of America, acting by and through the Administration of the Rural Electrification
- The commitment must provide that the interest of the of the Government
(or the Government and any concurrent mortgagees), as mortgagee(s) will be
shown in the policy. This may be accomplished by a provision in the commitment
stating that the policy will make specific reference to the last complete
"REA" mortgage or deed of trust.
- That, if construction of the improvements on the site has not been completed
on the date the policy is to be issued, the policy should contain a provision
similar to the following:
"Pending such time as the improvements contemplated upon insured premises shall be commenced, liability under this policy is limited to $ ___________, being the purchase price paid for the land; but as and when the erection of such improvements shall be commenced, liability hereunder shall increase, as the improvements, progress, in the amount of the cost thereof, up to the face amount of this policy."