Bulletin: NL000031

Dear Associates:

Due to the rapid increase in mortgage rates, some mortgage companies will go out of business. Lack of investor funds, declines in applications and an inability to market loans locked at low rates all contribute. Several markets have already experienced mortgage company failure and the tragic fall-out: angry borrowers, and title company losses. Help prevent losses to you and the company by practicing the following:

• Know your lender. If you are dealing with funds from a well established financial institution, you may accept the institution's corporate check, unless your state has a good funds rule that requires ready funds. If you are dealing with a lender with whom you have had little or no prior contact, you should exercise caution. Proceed to next paragraph.
  
  
• Good funds. Many states have good funds regulations. But not all good funds rules are created equal! If your state's regulations define corporate checks as good funds or you don't have a good funds regulation, do not perform a settlement without ready funds such as wired funds or certified funds. RULE: Never accept a draft (there is no such thing as a certified draft). If you don't do settlements, make sure your settlement agents adhere to these rules. Proceed to next paragraph.
  
  
• Payoffs and policies. If you are not doing the settlement and not disbursing the proceeds, always confirm that the prior liens have been paid off before you issue the policy. If the settlement involves good funds and you confirm the payoff, you can issue the policy.
  
  
• If for any reason you close without good funds, do not deliver the note and title policy until you do receive good funds.

Following the above procedures will prevent losses to your title office due to mortgage company failure. If you have any questions about the type of funds you have received, please call the National Legal Department in Houston or your Stewart representative. If you have any questions about your state's good funds rule, please call your district or state Stewart representative.