Bulletin: TX000047

This bulletin has been partially replaced by TX2017009.

Dear Associates:

The following Lender Letter 05-98, dated 12-4-98 has been published by Fannie Mae. The original is available on their website - www.fanniemae.com.

Title Insurance Coverage for Texas 50(a)(6) Mortgages, LL05-98, dated 12/04/98.

In LL02-98 (dated 05/28/98), we indicated that we would continue to purchase Texas Section 50(a)(6) cash-out refinance first mortgages that have title insurance coverage under the Mortgagee Policy of Title Insurance (Form T-2) and the Equity Loan Mortgage Endorsement (Form T-42) until further notice. We also stated that we would issue guidance about our title insurance requirements when additional optional endorsements to protect the interests of the mortgage holder became available.

An endorsement providing this additional coverage -- Supplemental Coverage Equity Loan Mortgage Endorsement (Form T-42.1) -- is now available.

To give all lenders sufficient time for changing their closing processes to assure that all Texas Section 50(a)(6) mortgages they deliver to Fannie Mae have this additional coverage, we will continue to accept deliveries of mortgages without this additional T-42.1 endorsement through February 28, 1999. Lenders may, however, begin requiring borrowers to obtain the additional coverage effective immediately and deliver mortgages with that coverage to us.

As of March 1, 1999, all Texas Section 50(a)(6) mortgages that are delivered to Fannie Mae must have title insurance coverage provided by the T-2 policy and both the T-42 and T-42.1 endorsements. If you have any questions about our requirement to obtain the new optional title insurance coverage for Texas cash-out refinance first mortgages, contact the customer account team in your lead Fannie Mae regional office.

YOU HAVE NO DUTY TO ADVISE THE LENDER OF THESE REQUIREMENTS OR TO VERIFY WHETHER THE LENDER NEEDS THE ENDORSEMENT, IF ITS WRITTEN CLOSING INSTRUCTIONS DO NOT REQUEST THE ENDORSEMENT. However, when you are asked to issue a mortgagee policy after February 28, 1999, insuring a first lien home equity loan on Fannie Mae/Freddie Mac loan documents and the lender does not request a T-42.1 endorsement, you may wish to ask the lender if it is aware of the Fannie Mae guidelines and if it wants the T-42.1 endorsement.