STG Usury Endorsement Guideline 1
The Usury Endorsement is issued only in conjunction with the Loan Policy. There is no “standard” usury endorsement although at least three types of forms are evident:
(1) A Usury Endorsement which simply deletes the exclusion regarding usury;
(2) A Usury Endorsement which insures against loss by reason of invalidity or unenforceability of the lien of the insured mortgage resulting from violation of the usury laws of a specific state in effect at date of Policy; and
(3) A Usury Endorsement which provides more generous coverage regarding invalidity or unenforceability of the lien as to principal and interest (and which generally refers to a particular state and may, in addition, delete the exclusion).
Underwriting Requirements:Underwriting Requirements:
(1) We may require an attorney’s opinion (with copy of applicable statutes) to issue the Usury Endorsement. Reliance upon a state statute affording an apparent absolute exemption may be ill-advised since there may be conflicting criminal usury laws or subsequent laws modifying the effectiveness of the exemption. For example, Michigan and New Jersey have criminal laws that apparently conflict with or limit the effect of specific absolute exemption statutes. The attorney’s opinion elicits disclosure of any inconsistent statutes.
(2) We will issue the endorsement only if the state statute provides an absolute exemption since we are not in a position to calculate the effective rate of interest due to possible prepaid interest or equity participation.
(3) An Underwriter must approve issuance of a Usury Endorsement.
(4) We generally prefer to issue a usury endorsement limited to loss by reason of invalidity or unenforceability of the lien of the insured mortgage (without reference to principal and interest as such) under the laws of a specific state.
(5) We generally do not rely upon choice of law provisions in the loan documents in order to issue the endorsement where the state in which the land is located does not have an absolute exemption.
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.