Bulletin: VT000003

Dear Associates:

STGC is proud to announce the new GOLD Owner's and Loan Policy. These policies provide coverage to both owner's and lenders unsurpassed by any other policy. The GOLD Owner's policy now contains 21 insuring clauses and the GOLD loan policy contains 24 insuring clauses. Both Fannie Mae and Freddie Mac have approved the GOLD loan policy.

These policies will have a premium charge equal to 150% of the cost of the owner's or loan policy plus any additional charges for endorsement issued separately or included in the GOLD coverages. Endorsement coverages incorporated in the GOLD loan policy provisions are: CLTA Form 116 (Subdivision Map Act), ALTA Form 9, (Restrictions, Encroachments, and Minerals), ALTA Form 6 (Variable Interest Rate), Form 6.2 (Variable Rate, Negative Amortization). If any of these endorsements currently have a premium charge, that charge must be added to the 150% of total premium charged.

GOLD OWNER'S POLICY - some of the new coverages are:

1. Future Forgery: post policy forgery coverage will protect the insured against loss if someone else claims to own an interest in or claims to have a lien on the title (Insuring Clause No. 3).

2. Both pedestrian and vehicular legal right of access (Insuring Clause No. 5).

3. Forced removal of an existing structure because any part of the structure was built without obtaining a proper building permit. This coverage is limited to actual loss in excess of a 1% deductible with a maximum liability of $25,000 (Insuring Clause No. 12.d.).

4. Someone else seeks to take away the insured's title because of a violation of all excepted restriction before the insured becomes the owner (Insuring Clause No. 14).

5. Someone else tries to enforce an excepted restriction because of a violation which happened before the insured become the owner. This coverage is limited to actual loss in excess of a deductible of 1% of the Policy Amount (Insuring Clause No. 15).

6. Someone else refuses to purchase under a contract, lease or make a mortgage loan because of violation of an excepted restriction which happened before the insured became the owner (Insuring Clause No. 16).

7. Post policy, someone else builds a structure which encroaches on the insured's land (Insuring Clause No. 17).

8. The insured cannot obtain a building permit, or someone else refuses to purchase under a contract, lease, or make a mortgage loan because, at policy date, the land violates an existing subdivision law. This coverage is limited to actual loss in excess of a 1% deductible with a maximum liability of $10,000 (Insuring Clause No. 18).

9. The existing structure, any part of it, or a structure built after policy date as a replacement or modification of the existing structure is damaged by someone else using the surface for the extraction or development of minerals owned by them (Insuring Clause No. 19).

10. The map attached to, or referred to, in the policy does not show the same location and dimensions of the insured's land as shown in the public records (Insuring Clause No. 20). [This will be removed in certain jurisdictions.]

11. The policy protects and coverage extends to a trustee or successor trustee of a trust in which the insured is the trustee/settler to whom the insured transfers title after policy date (Conditions and Stipulations No. 2).

12. The amount of coverage will increase by 5% per year for the first 5 years to a maximum liability of 125% of the original policy amount (Conditions and Stipulations No. 10).

The GOLD Loan policy also contains new coverages for the lender. The new coverage insure against loss due to:

1. Not having both vehicular and pedestrian right of access (Insuring Clause No. 4).

2. Mechanic's Lien coverage for service, work or material done or provided before or after policy date (Insuring Clause No. 7).

3. Violation of usury laws (Insuring Clause No. 10).

4. Failure of the map attached to, or referral to in, the policy to show the correct location and dimensions of the land according to the Public Records (Insuring Clause No. 11). [This will be removed in certain jurisdictions.]

5. Failure of the land to have the street address shown in Schedule A (Insuring Clause No. 12).

6. Failure of the land to contain a one-to-four family residential structure, or a condominium if stated in Schedule A (Insuring Clause No. 13).

7. Failure of the land to be zoned for one-to-four family residential structures, or a condominium if stated in Schedule A (Insuring Clause NO. 14).

8. Failure to the land to be a lawfully created parcel under state subdivision map acts and local ordinances (Insuring Clause No. 15).

9. Failure of all or part of a residential structure, or a modification or replacement post policy date, to have a valid building permit from the appropriate local government office (Insuring Clause No. 16).

10. Matters covered by ALTA Form 9 (Insuring Clause No. 18).

11. Survey matters (Insuring Clause No. 18).

12. Inability to use the existing structure, or as post policy replacement, for residential purposes because the use violates an erupted restrictions (Insuring Clause No. 19).

13. Encroachment onto the land by a post policy improvement constructed by someone other than, and without the consent of the then owner of the land (Insuring Clause No. 20),

14. Damage to improvements, including lawn, shrubbery or trees, built or planted as a post policy modification or replacement, as a result of mineral extraction or development (Insuring Clause No. 21).

15. Matters covered by ALTA Form 6 or ALTA Form 6.2, as the case may be (Insuring Clause No. 22).

16. Post policy forgery of an assignment, release, or full or partial reconveyance, or the insured has acquired title under Section 2(a) of the Conditions and Stipulations, has not conveyed its interest and another claims title under a forged instrument (Insuring Clause No. 23).

17. Post policy environmental protection liens under state statutes in effect at policy date (Insuring Clause No. 24).

18. Invalidity, unenforceability, or lack of priority as to post policy advances made pursuant to the terms of the mortgage and advances and/or interest rate changes made post policy and secured by a modification of the mortgage (Insuring Clause No. 25).

As you can see, the additional coverages are extensive and require additional underwriting procedures. Attached you will find the underwriting guidelines for the issuance of both the GOLD Owner's Policy and the GOLD Loan Policy, and an affidavit to be executed by the seller or borrower, as the case may be.

Should you have any questions, please do not hesitate to call the National Legal Department in Houston, Texas at 800-729-1902.

OWNER'S POLICY UNDERWRITING GUIDELINES

Issue only on one-to-four family residence or residential condominium.

Issue only if improved. Verify by review of tax/assessment search. If search does not reflect improvements, do inspection.

Issue only on bona fide sale, not existing ownership by insured.

Issue only on (A) a platted lot within a city or not exceeding one acre or (B) condominium unit. Do not issue on metes and bounds or other property without underwriter approval.

Verify by tax/assessment search that separately assessed.

Verify with homeowners association that assessments paid current and that any right of first refusal will not be exercised in current transaction (if there is a right of first refusal).

Verify no pending or current construction ongoing.

If builder sale, verify that certificate of occupancy or local equivalent issued, so that house can be occupied.

Verify that all bills paid on any prior construction within lien period.

If attach map of land (not required on policy), verify that description same as Schedule A description.

Require seller to execute special affidavit and your customary affidavit of debts and liens.

Verify by review of restrictions/covenants that the land may be used as a residence.

Except as provided above, no survey or inspection required.

Policy may be dated and issued on date of settlement's if your requirements have been met, funds disbursed, and you are in position to promptly record. You may show that date as date of policy and you do not need to show recording information in Schedule A.

LOAN POLICY UNDERWRITING GUIDELINES

Issue only on one-to-four family residence or residential condominium.

Issue only if improved. Verify by review of tax/assessment search. If search does not reflect improvements, do inspection.

Issue on first liens only.

Issue only if lender is institutional lender commonly making residential loans. Do not issue if lender is individual.

Do not issue if loan for construction or repair of improvements.

Issue only on (1) platted lot within a city or not exceeding one acre, or (2) condominium unit. Do not issue on metes and bounds or other property without underwriter approval.

Verify by tax/assessment search that separately assessed.

Verify with homeowner's association that assessments paid current and that any right of first refusal will not be exercised in current transaction (if there is a right of first refusal).

Verify no pending or current construction ongoing.

If builder sale, verify that certificate of occupancy or local equivalent issued, so that house can be occupied.

Verify that all bills paid on any prior construction within lien period.

If attach map of land (not required on policy), verify that description same as Schedule A description.

If sale, require sellers to execute affidavit and your customary affidavit of debts and liens. If no sale, require borrowers to execute affidavit and your customary affidavit of debts and liens.

Verify by review of restrictions/convenants that the land may be used as a residence.

Except as provided above, no inspection or survey required.

Verify homeowners assessment liens subordinated to insured mortgage (e.g. as purchase money or first lien). If condominium or uniform act subordinates lien to some assessments, specific exception in Schedule B must be required. If the assessment lien of a covenant is not subordinate, specifically state in Schedule B.

Separately and specifically except to easements, assessment liens, and options or first refusals set forth in covenants.

Do not issue this loan policy if examination reflects unusual exceptions such as notices of violations of law or restrictions, lis pendens, adverse ownership.

Policy may be dated and issued on date of settlement/closing if your requirements have been met, funds disbursed, and you are in a position to promptly record, absent lender instructions otherwise, you may show that date as date of policy and you do not need to show recording information in Schedule A.