- October 11, 2010
- All New York State Office Counsel, Managers and Agents
- Insuring at or after Mortgage or Deed of Trust Foreclosure
Serious questions have been raised concerning foreclosures by institutional lenders/servicers. For example, GMAC, One West, Bank of America, and JP Morgan Chase have recently encountered possible errors in foreclosures and have suspended certain foreclosures.
If you are insuring title to a purchaser or lender after a foreclosure sale of a mortgage in New York, the following criteria for all foreclosing lenders must be complied with:
1. Do not insure on any foreclosures by JP Morgan Chase, Bank of America, One West or GMAC/Ally Bank or any of their successors or assigns where any of those lenders currently holds title unless you secure Agency Legal Services approval.
2. Verify that all foreclosure requirements (including a final, non-appealable judgment in a judicial foreclosure) under NY state law and our guidelines have been met. See Bulletin No NY000371 and NY000372.
3. Verify that the lender is not currently pursuing a deficiency judgment against the mortgagors. If the lender is seeking a deficiency, Agency Legal Services must approve the transaction.
4. Verify that the mortgagor subject to the foreclosure is not in possession of the property.If the mortgagor is in possession when you issue your commitment/title report, the commitment/Title report and policies should contain the following exception:
"Any rights, claims or interest of (the mortgagor) in the land or any claim that the foreclosure by (lender) is invalid."
5.Determine that no other parties, such as tenants under prior leases, are in possession, because their rights may not have been extinguished by the foreclosure. For example, the Protecting Tenants at Foreclosure Act (which expires December 31, 2012) applies to "any foreclosure on a federally-related mortgage loan or on any dwelling or residential real property after the date of enactment of this title (May 20, 2009)" and allows a tenant to remain in possession under a prior lease under certain conditions.
Click here to view Title VII-Protecting Tenants at Foreclosure Act.
If other parties are in possession, the commitment and policies should except to rights of parties in possession or should except to the specific lease.
6. Except any applicable rights of redemption pursuant to any applicable State of Federal Statutes.
7. Verify that no governmental authority (e.g. State Attorney General) in the state in which the property is located has issued a demand or commenced litigation (such as the suit by the Ohio Attorney General against Ally Financial and GMAC) to halt foreclosures or REO sales. If such demands or litigation have issued/commenced, please contact a Stewart Agency Legal Services before proceeding.
8. Verify that no class action suits (such as the class action filed against GMAC in Maine) seeking to overturn/enjoin foreclosures or REO sales have been commenced which may affect the instant transaction. If such an action has been commenced please contact a Stewart Agency Legal Services before proceeding.
9. If you are asked to insure on the first sale after foreclosure, you should determine that the amount owed on the foreclosed mortgage exceeds the current resale price. Otherwise secure Agency Legal Services approval.
10. Under certain circumstances the Company may accept an appropriate Certification and indemnity from the foreclosing lender concerning the possible errors in the foreclosure. The Stewart Title Insurance Company approved Certification and Indemnity is attached. The Certification and Indemnity must be executed by a Bank officer.
11. If these criteria cannot be met, you may not issue a Stewart Title Insurance Company policy without Agency Legal Services Approval.
If you have questions related to this bulletin, please contact Stewart Agency Legal Services or your local underwriting personnel.
For online viewing of this and other bulletins, log onto: http://ww.stewart.com/new-york
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.
- Bulletins Replaced:
- Related Bulletins:
- NY000371 Purchase of New York "Subprime Home Loans"
- NY000372 New Act Relating to Mortgage Foreclosures and Subprime Loans
- Underwriting Manual:
- Exceptions Manual: