Bulletin: NL000060

Dear Associates:

It is easier to prevent claims than to resolve them after they occur. The advantages of prevention are obvious and include: (1) happy customers; and, (2) less claims expense. Thus, to assist in claims prevention, periodically, the National Legal Department will issue bulletins addressing recent claims that have affected our industry.

Please discuss these bulletins with your associates.

Reward Program

To encourage everyone to be claims prevention conscious, Stewart Title Guaranty Company is implementing a reward program for claim prevention ideas beginning April 1, 1997. The rules are simple and are as follows:

1. For each original and reasonable claim prevention idea received by the Claims Prevention Counsel in the National Legal Department, Stewart Title Guaranty Company, P. O. Box 2029, Houston, Texas 77252-2029, the person first submitting the idea will receive $25.00.
   
   
2. For each claim prevention idea that is published in a Claims Prevention Bulletin, the first person to submit the idea will receive $25.00.
   
   
3. For the best claim prevention idea received by the Claims Prevention Counsel each month, the associate first submitting the idea will receive $50.00.
   
   
4. This program may be discontinued at any time and all decisions of the Claims Prevention Counsel will be final.

Claims Prevention Idea

Payoff checks or wires must be made to the record holder (and collateral assignee, if any) of the debt. These payments should not be made to the servicing agent or other third party.

Reason

There have been a number of claims recently where the payoff checks were made payable to a third party who assured the closer that she/he would make the payment to the lender and obtain the necessary release of the liens. The payoffs were never made and the underwriter is now unable to locate the servicing agent or the funds.