THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.
Bulletin: NY000255
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Bulletin: NY000255
Lately we have received a number of inquiries regarding the formula for computing premiums where two loan policies are being issued simultaneously on the same property. Common scenarios include the simultaneous making of acquisition and construction loans, traditional first mortgages on homes together with separate credit line home equity loans and more recently, two separate home loans being made simultaneously to avoid a requirement for private mortgage insurance.
Whatever the particular scenario may be, the Title Insurance Rate Service Association ("TIRSA") Rate Manual clearly addresses the issue. Section 19 of the TIRSA Rate Manual read as follows:
SECTION 19 - SIMULTANEOUS ISSUE OF TWO OR MORE LOAN POLICIES
A. When two or more loan policies covering identical property are issued simultaneously, the charge shall be based on the aggregate amount of the loan policies at the applicable loan policy rate.
Using Zone Two rates as an example, if your transaction results in the simultaneous issuance of an owner's policy of $500,000, a loan policy insuring a first mortgage of $300,000 and a loan policy insuring a second mortgage of $100,000, all covering identical premises, the premiums to be charged would be $2518.00 for the fee policy and $524 for both loan policies. The owner's policy premium is computed at the filed rate per thousand dollars of liability and the loan policies are aggregated (as if there were one $400,000 liability) and the premium calculated the applicable loan policy rate, in this case thirty percent of the loan rate.
In keeping with the foregoing, where the loan policies are the only policies issued, the premium would be calculated at the applicable rate for the aggregate liability amount. For example, and again using Zone Two rates, if two loan policies are issued simultaneously for $300,000 and $100,000 and it is determined that there is prior owner's coverage in the amount of $500,000 and all criteria are satisfied under Section 14 of the Rate Manual,[1] the premium would be $1222, again for both policies (70% of the unreduced premium of $1746).
In the event that you have any questions regarding the computation of any premium to be charged, please call your Stewart Title representative for assistance.
[1] SECTION 14 - REFINANCE AND SUBORDINATE MORTGAGE
A.
1. Whenever an application for a loan policy in the amount of $250,000 or less is made within ten years from the date of closing of a previously insured mortgage or fee interest, and the premises to be insured are identical, and there has been no change in the fee ownership, the charge for such insurance shall be fifty percent (50%) of the applicable loan rate, up to the largest amount of existing insurance (either the liability on the owner's policy issued to the current owner or the present unpaid principal balance of the existing insured loan), plus the full applicable loan rate on any excess.
2. Whenever an application for a leasehold loan policy in the amount of $250,000 or less is made within ten years from the date of closing of a previously insured leasehold interest or mortgage on the leasehold interest, and the premises to be insured are identical, and there has been no change in the ownership of the leasehold, the charge for such insurance shall be fifty percent (50%) of the applicable loan rate, up to the largest amount of existing insurance (either the liability on the leasehold owner's policy issued to the current owner or the present unpaid principal balance of the existing insured loan), plus the full applicable loan rate on any excess.
B.
1. Whenever an application for a loan policy in an amount over $250,000 is made within ten years from the date of closing of a previously insured mortgage or fee interest, and the premises to be insured are identical, and there has been no change in the fee ownership, the charge for such insurance shall be seventy percent (70%) of the applicable loan rate, up to the largest amount of existing insurance (either the liability on the owner's policy issued to the current owner or the present unpaid principal balance of the existing insured loan), plus the full applicable loan rate on any excess.
2. Whenever an application for a leasehold loan policy in an amount over $250,000 is made within ten years from the date of closing of a previously insured leasehold interest or mortgage on the leasehold interest, and the premises to be insured are identical, and there has been no change in the ownership of the leasehold, the charge for such insurance shall be seventy percent (70%) of the applicable loan rate, up to the largest amount of existing insurance (either the liability on the leasehold owner's policy issued to the current owner or the present unpaid principal balance of the existing insured loan), plus the full applicable loan rate on any excess.
C. In order to ensure consumer awareness of this Section, each Company shall include the following statement, in bold print, on the face of each application confirmation:
IF THIS IS A REFINANCE WITHIN TEN YEARS, YOU MAY BE ENTITLED TO A REDUCED PREMIUM. CONTACT THIS COMPANY IMMEDIATELY FOR DETAILS.
References
- Bulletins Replaced:
- None
- Related Bulletins:
- None
- Underwriting Manual:
- None
- Exceptions Manual:
- None
- Forms:
- None