Bulletin: SLS2010027

Dear Associates:

A recent case invalidating a deed of trust highlights the importance of examining all litigation affecting a mortgage or deed of trust. The case at issue involved a challenge to the validity of the lien of a deed of trust. In that case, the court declared the deed of trust "a nullity and of no further force and effect" even though the debt had not been paid and the lien had not been released. The property was subsequently sold to a third party.

If your search discloses any litigation seeking to challenge a foreclosure or a trustee's sale, or otherwise intended to undermine the validity or enforceability of a mortgage or deed of trust, you should continue to show both the mortgage/deed of trust and the lawsuit as exceptions on all commitment and policies, notwithstanding a judicial determination setting aside, quieting title or otherwise affecting the mortgage or deed of trust. Each such proceeding must be thoroughly examined. You should not omit such exceptions without Underwriter approval, unless you have received proof of payment of the debt and a release, in recordable form, sufficient to clear the records.

If you have questions related to this bulletin, please contact Stewart Legal Services or your local underwriting personnel.

For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.