Bulletin: CA000016

Dear Associates:

Over the past several months, we have been requested to include a Schedule A as affirmative coverage in lender's policies in favor of the United States Department of Housing and Urban Development, a reference to the HUD Regulatory Agreement which is recorded simultaneously and incorporated by reference to their insured Deed of Trust. The Regulatory Agreements are, generally, agreements between the Developer of multi-family housing and HUD that certain of the units will remain low cost housing. There has been some question as to whether or not we should be reflecting the Regulatory Agreements as an exception in Schedule B Part II and/or if we should be showing it in Schedule A subject to its own terms and provisions.

Any request that the Regulatory Agreement be included as part of the affirmative assurances set forth in Schedule A and further, that no exceptions be taken in Schedule B needs to be reviewed on a case-by-case basis by a senior underwriter for Stewart Title Guaranty. The California Senior Underwriters will consider providing affirmative insurance without exception for the terms and provisions of the Regulatory Agreement in Schedule B based upon the position that Stewart Title does not insure compliance of the matters contained in the Regulatory Agreement and, therefore, is not covered by the policy terms. However, if we are requested to issue and ALTA form 9 endorsement or other CLTA 100 form endorsement coverage to a final policy or a subsequent resale or loan policy, an inspection must be made to determine that the property is, in fact, being used for low income use as well as determine that there are no obvious violations of the matters contained in the Regulatory Agreement.