T-2R Guideline - TX Short Form Residential Mortgagee Policy of Title Insurance and Addendum

Organizational Guidelines

T-2R Guideline - TX Short Form Residential Mortgagee Policy of Title Insurance and Addendum

Guideline Document
V 1


You may issue the Texas Short Form Residential Mortgagee Policy - One-to-Four Family (T-2R) on Residential Real Property, if the lender instructions request the policy.

Underwriting Requirements:

Date of Policy: Put the date of settlement in the blank on Schedule A for the Date of Policy. The Policy then says that the effective date is the later of that date or the date of recording. That means the Short Form gives "gap coverage" between your date of examination and the date of recording. You do not need to await recording information, if this is acceptable to your insured. Tell the lender that this will speed up delivery of the policy to them so they can deliver their loan immediately into the secondary market. If your lender objects please notify Wanda Mae at (800)729-1900 ext. 8452, or (713)625-8452 and she will send the Fannie Mae guidelines to the lender and if necessary initiate a conference call with the lender to explain the benefits of this policy.

Record Mortgage: You must still file for record the mortgage the same day you issue the policy or at the latest, first thing the next morning or business day. We advise that you establish a procedure for recording twice a day, if practical in your area.

Rates for the Short Form: You charge the normal rates (including any refinance credit) on Mortgagee Policies for issuance of this Policy and the endorsements that you mark.

Search of Title for the Short Form: You must perform a general index search for the time period of the statute of limitations on judgments (10 years under State law), and for the time period of the limitations on Federal judgments (20 years) and Federal tax liens (10 years). You must check taxes, assessments of all types, and other governmental charges. You should be satisfied that there are no recent unpaid bills for improvements. An affidavit is satisfactory unless you have other indications of work having been done.

If you issue the Policy on a first lien and you have a prior title policy (owner's, loan or master/short form issued by an authorized title insurer), search from (1) prior policy or (2) one bona fide (not gift or intrafamily) deed and institutional loan back. If you do not have a prior policy, search for two bona fide deeds back (but do your normal search if you also issue a simultaneous Owner Policy).

If you issue the Policy on a subordinate lien, search one (1) bona fide deed and institutional loan back (but do your normal search if you also issue a simultaneous Owner Policy).

First Lien and Subordinate Lien Insured on Short Form: The Short Form Mortgagee Policy may insure a first lien or subordinate lien.

The Short Form Mortgagee Policy may insure a first lien. If there is a subordinate lien (and you insure the first mortgage), you should mark the box in Schedule A (X "Addendum Attached"), attach the Addendum, and then add "Company insures the insured against loss, if any, sustained by the insured under the terms of the Policy if this item is not subordinate to the lien of the insured mortgage." This complies with Procedural Rule P-11b8.

You also may insure a second lien by the Short Form Mortgagee Policy: just X "Addendum Attached," and show the first mortgage as an exception on the Addendum.

Type of Property Covered by Short Form: You may issue the Policy on Fee Simple. If you are asked to issue the Short Form Loan Policy on a Leasehold, please call our underwriting personnel. Issue the Policy only on one-to-four family residential property.

What Does Short Form Say: The Short Form Policy is an actual policy. There are two sides to the Policy: Schedule A and Schedule B. The first paragraph above Schedule B incorporates the terms of the Mortgagee Policy (T-2) without reprinting those terms. That shortens the Policy. You do not need to attach a Mortgagee Policy jacket to this Policy, since it is an individual Mortgagee Policy, complete with Schedules A and B.

Schedule A Information:

Amount of Insurance: This should be the mortgage amount.

Premium: This is your normal premium charge for any regular Mortgagee Policy (T-2), plus any premium bearing endorsements checked.

File Number: Use your own numbering system for this number.

Loan Number: This is the loan number, if any, given to you by the lender.

Mortgage Amount: This is the amount of the mortgage debt.

Mortgage Date: This is the date the mortgage was executed.

Policy Number: You do not need to complete, since it is shown below on the printed form. Note that Fannie Mae wants you to use the preprinted forms from us and does not want you to laser print your own.

Date of Policy: "____ or date of recording of insured mortgage, whichever is later." You add the date of settlement in the blank, unless the lender's instructions say otherwise. This provision automatically gives "gap" coverage.

Name of Insured: This is the lender, or the assignee if the assignment is recorded contemporaneously. You may add: "ABC Mortgage Company and each successor in ownership of the indebtedness secured by the insured mortgage, except a successor who is an obligor under the provisions of Section 12(c) of the Conditions and Stipulations."
Name of Borrower(s): The borrowers are the parties who execute the mortgage.

Property Address: This should be the actual address of the land covered by the mortgage and actually shown in the mortgage. If the mortgage has a mailing address for the land (such as a route), you may use that mailing address. The policy does not contain a legal description, but incorporates the description contained in the mortgage. Do not use the address shown on the mortgage if you believe that it is incorrect. You will, of course, still search the title to the property as it is legally described in the documents and as found in the public records.
County and State: Here add Texas and the county in which the land is located.

Addendum: Check this box only if you add an Addendum.

Arbitration: Check this box ("Section 13" is hereby deleted) if the lender instructions request deletion of the arbitration clause.

Endorsements incorporated: You do not attach endorsements. You simply mark the applicable choice and charge for the endorsement if it is premium bearing. You may incorporate any of the endorsement boxes if you verify that our guidelines for those endorsements have been met. The Endorsements available are T-30 (Tax Deletion), T-33 (Adjustable Mortgage), T-17 (new Planned Unit Development), T-19 (new Restrictions, Encroachments, Minerals), T-31 (Manufactured Housing), T-31.1 (new Supplemental Coverage Manufactured Housing Unit), T-36 (Environmental Protection Lien - we will print the exceptions in our Short Form), T-42 (Equity Loan Mortgage - with optional paragraph 2(f) relating to closing included, and with optional deletion of subparagraphs), T-42.1 (Supplemental Coverage Equity Loan Mortgage - with optional deletion of subparagraphs), and T-43 (Reverse Mortgage - with optional deletion of subparagraphs).

Schedule B Information:

Restrictions: You do not need to add exceptions in the Addendum to restrictions, easements or minerals. They are generally excepted in the pre-printed Schedule B of the Short Form Mortgagee Policy. The Policy also provides express insurance as to those items. Verify the property owner' association assessments are paid current, unless subordinate to the lien of the insured mortgage. Verify no reverter, unless subordinate to the insured mortgage. If there are known existing restriction violations, insure if authorized or willing to do so.

Survey Matters (Area and Boundary Coverage): You may rely upon evidence of an existing survey.

Procedural Rule P-2 provides that amending the area and boundary exception to read only "shortages in area" requires that the title company review a survey or evidence of a survey of any age brought current by the Affidavit T-47. Any time you receive a request to amend the area and boundary exception, you must follow this rule. This applies to owner policies as well as mortgagee policies.

Procedural Rule P-50 provides that the title company may issue forms T-19 and T-19.1 Restrictions, Encroachments and Minerals Endorsement if its underwriting requirements are met and the premium is paid. Procedural Rule P-9b14 provides the same thing for the T-17 Planned Unit development Endorsement. Neither of these rules requires a survey or evidence of a survey in order to issue these endorsements.

If you are requested by the lender to issue the T-19 or the T-17 but are not asked to amend the area and boundary exception, you may do so for platted lots without reviewing or requiring a survey or evidence of a survey. If you are insuring new construction (that is, no policy has been issued showing the improvement to the property), a survey is still required. If the insuring acreage tracts with no survey, you can’t make the area and boundary amendment and you must delete item 4 a, b, c and d of the T-19 and from the T-19.1

A survey or evidence of a survey is required to issue a T-19.1 or to amend coverage in the OTP. For those offices that are automatically opting to make the area and boundary amendment in the OTP, be sure to advise the buyer that they should arrange with the seller to be furnished with a copy of the seller's old survey or they will need to provide a new one at closing.

If you have questions, please contact a Texas Underwriting Counsel.”

Any revision to this form requires approval of a Stewart Title Guaranty Company underwriter. 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.

This guideline applies to the following form(s):