Bulletin: GA2010005

Dear Associates:

There has been considerable confusion recently over the proper way to modify a loan policy when the lender is entering into a modification agreement with the borrower which will either (1) extend the loan terms only; or (2) change the interest rate of the loan; or (3) advance additional "new money" to the borrower; or (4) where there is a combination of any of the above. In such cases, the lender will want assurances that the modification will not result in the invalidity or unenforceability of the insured mortgage; and that the mortgage, as modified, has priority over intervening matters such as mortgages, liens, covenants or easements.

There are two ways to properly insure an extension or modification of an insured security deed or mortgage. The first and most efficient way is through the issuance of the ALTA Endorsement 11-06 (Mortgage Modification) or the CLTA Modification and Additional Advance (06-03-05) 110.10. The CLTA 110.10 endorsement should be used when the lender wants to increase the amount of their policy by the amount of the additional advance. The Company requires strict compliance with the underwriting guidelines related to modification. The second way is through the issuance of a new loan policy, which insures both the original security deed and any subsequently recorded modification agreement.

The charge for a new policy or endorsement issued in conjunction with an extension or modification agreement must comply with the premium fee as set forth in our Manual of Title Insurance Fees.

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

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