Guideline: ALTA Endorsement 6 (Variable Rate Mortgage) and 6.2 (Variable Rate Mortgage - Negative Amortization)

Organizational Guidelines

Guideline: ALTA Endorsement 6 (Variable Rate Mortgage) and 6.2 (Variable Rate Mortgage - Negative Amortization)

Guideline Document
08/19/2021
V 4

Explanation:

This endorsement insures against the invalidity, unenforceability, or loss of priority of the lien of the insured mortgage by reason of provisions for changes in the rate of interest.  Form 6.2 also insures against the invalidity, loss of priority or unenforceability of the lien of the insured mortgage by reason of interest on interest or the addition of unpaid interest to the principal balance.  None of the endorsements increase the face amount of the Policy.  The endorsement excludes usury, consumer credit protection, and truth-in-lending laws.

ALTA 6-06 and 6.2-06 are designed to be issued with a 2006 ALTA Loan Policy.  ALTA 6 (07-01-2021) and 6.2 (07-01-2021) contain modifications to align the endorsements to the terms of the 2021 ALTA Loan Policy and are designed to be issued with the 2021 Loan Policy.  Where available, use the version of the endorsement designed for the applicable policy, unless approved by a Stewart Title Guaranty Company underwriter.  It is not necessary to indicate “-06” or the parenthetical (date) on the endorsement attached to the policy.

Underwriting Requirements:

1. This endorsement may be issued in conjunction with the Loan Policy so long as the mortgage or mortgage rider refers to the variable rate features of the interest rate and, where applicable, to the negative amortization provisions.  The interest rate should be determined by an objective formula not within the control of the lender (e.g., its own "prime rate").

2. You should except to any applicable state law limiting the effectiveness of variable rate mortgage provisions.

3. You may issue the ALTA 6.2 if negative amortization is provided.  We generally require that the mortgage state the maximum amount of amortization possible.  Do not issue the ALTA 6.2 without underwriter approval if the lender receives appreciation, contingent interest, or a portion of cash flow.  Any applicable state law limiting the effectiveness of such features on commercial transactions must be analyzed.

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.

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.