Bulletin: NY000092

Dear Associates:

We have recently been advised of a mortgage recording tax issue that has developed in several counties in upstate New York relating to mortgages which contain a SONYMA Mortgage Assistance Program Rider (hereafter referred to as "the Rider". A copy of the Rider is available through the New York City and White Plains offices. The problem may not be confined to upstate New York and, therefore, all offices and agents of Stewart Title Insurance Company should be aware of the problem.

In connection with mortgages given to first time home buyers of single family homes pursuant to the SONYMA Mortgage Assistance Loan Program, the State of New York, working in conjunction with private institutional lenders, provides funding to reduce the borrower's down payment, purchase or closing costs. These funds are referred to as the "Recapture Obligation" in the Rider contained in the mortgage. The Rider states that the Recapture Obligation is added to and made a component of the "Sums Secured" by the mortgage. The terms of the Rider provide that if the borrower complies with all the terms of the mortgage and remains as the Owner Occupant of the real property (which is the subject of the mortgage) for a period of 5 years from the making of the mortgage, the Rider will be deemed to be of no further force or effect and the Recapture Obligation will not have to be repaid.

The Genesee County Clerk has advised its staff and title searchers that, pursuant to discussions had with the New York State Department of Taxation and Finance, the Recapture Obligation amount will be added to the face amount of the mortgage in computing the amount of mortgage recording tax due on the recording of the mortgage. This position was confirmed by Peter Romano of the Department's Technical Services Bureau in a conversation had between Mr. Romano and the undersigned. Mr. Romano cited Section 2412 of the Public Authorities Law which provides that the property, income and operations of SONYMA are exempt from taxation except for assessments for local improvement and the mortgage recording tax imposed by Article 11 of the Tax Law.

Until such time as there is a clarification or change in the Department's position, all offices and agents are advised that in the event that such a mortgage is to be recorded and/or insured by the Company, mortgage recording tax must be collected on both the principal amount of the mortgage and the recapture amount shown in the Rider.

Should you have any questions in this matter, please contact Company Counsel.