Bulletin: NY000152

Dear Associates:

On October 21, 1997, the New York State Department of Insurance approved several changes to the Title Insurance Rate Service Association (TIRSA) Rate Manual. Most of the changes were made to correct minor inconsistencies or errors in existing TIRSA endorsements. In other cases, however, the changes were much more substantial. The changes will be explained in 3 separate bulletins, commencing with this one, which deals with the correction of minor errors and inconsistencies.

(1) TIRSA 8.1 Environmental Protection Endorsement

(a) Under the TIRSA manual prior to the change, there were three (3) variations of this endorsement, one form to be used everywhere in this State except New York City, another form to be used within the City of New York, and a third form to be used in connection with mortgages made to governmental entities. In Paragraph B of the New York City version of the endorsement, Section 1307 of the Public Health Law is referenced as an environmental protection lien statute over which the policy does not provide priority coverage. A reading of Section 1307 specifically provides, however, that it is not applicable within the City of New York.

(b) The changes approved on 10/21/97 retain the three (3) existing versions of the endorsement, but remove the reference to Section 1307 of the Public Health Law from the New York City version. The reference to all three versions has been simplified so that, hereafter, it will be known as the "TIRSA 8.1 EPL" endorsement. Finally, the form of validating language (i.e. whether a countersignature at the bottom of the endorsement will be required, in addition to the execution of the endorsement by a Company officer) has been left to the discretion of each individual underwriter.

(2) TIRSA - Revolving Credit Endorsements

(a) The TIRSA Manual had, prior to the recent changes, 3 separate forms of this endorsement, namely, the residential revolving credit endorsement, commercial revolving credit endorsement for mortgages of less than $3,000,000, and a commercial revolving credit endorsement for mortgages of $3,000,000 or more. These endorsements except from coverage several matters, such as Federal Tax Liens, bankruptcy, usury, or any consumer credit protection law and mechanic's liens (the residential form does not except mechanic's liens), and provide no coverage if an advance is made at a time when an Event of Default exists under the credit lien mortgage regardless of whether the insured has knowledge of such default.

(b) On October 21, 1997 in order to better address the needs of revolving credit mortgage lenders, the following changes were approved.

(1) an additional form of endorsement, for commercial credit line mortgages which are not building loan mortgages and have a term of 3 years or less (limited term/special coverage) was adopted. This form of the endorsement provides mechanic's liens coverage to the insured. Because of the high risk nature of this endorsement, the charge for it will be 20% of the regular mortgage rate.

(2) These endorsements will be referred to as TIRSA RCE-1, RCE-2, RCE-3, and RCE-4.

RCE-1 (Residential)
RCE-2 (Commercial Credit Line Mortgage for less than $3,000,000)
RCE-3 (Limited term special coverage)
RCE-4 (Commercial Credit Line Mortgage of $3,000,000 or more)

(3) The exception for usury and consumer credit protection has been removed from the three (3) existing endorsement and it does not appear as an exception in the new RCE-3 endorsement. They were deleted because they already appear in Paragraph 5 of the Exclusions from coverage in the 10-17-92 ALTA Loan Policy.

(4) Where an advance is made during an event of default, coverage will now be provided except where the lender had actual knowledge of the default. The first paragraph of the endorsement has been modified to so provide.

(5) The charge for Endorsements RCE-1, RCE-2 and RCE-4 will remain at 10% of the regular mortgage rate.

(6) Just as in the case of the TIRSA 8.1, the form of validation language for the Revolving Credit Endorsements has been left to the discretion of each underwriter.

Should you have any questions regarding this matter, please do not hesitate to contact the New York City office.