Bulletin: OK2013001

Dear Associates:

        Since its effective date of November 1, 1986, the Company has insured mortgages structured in accordance with the Oklahoma Power of Sale Mortgage Foreclosure Act. In addition, the Company has insured the title sold by a mortgagee under the power of sale granted in a power of sale mortgage. The underwriting guidelines for such transactions are set forth herein. However, the application of the standards set out in this bulletin is not a substitute for the required attorney’s opinion. This bulletin will not discuss the specifics of the Act exhaustively. If you are interested in an in-depth discussion of the Act, you may refer to Oklahoma Bar Association seminar materials and Oklahoma Bar Journal articles on this subject.

I. Insuring a Power of Sale Mortgage

A power of sale mortgage may be insured provided it contains a statement in bold and underlined language substantially as follows (46 O.S. §43.A.2.a):

A power of sale has been granted in this mortgage. A power of sale may allow the mortgagee to take the mortgaged property and sell it without going into court in a foreclosure action upon default by the mortgagor under this mortgage.

In addition, it is desirable that the mortgage be labeled as a “Power of Sale Mortgage”. It is also desirable that there be a specific provision in the mortgage whereby the mortgagor grants the power of sale to the mortgagee. (Note: All “CAPITALS” is deemed to meet the “bold” requirement.)

II. Insuring a Title Derived Through Foreclosure of a Power of Sale Mortgage

To insure titles derived through a power of sale mortgage foreclosure, the Company requires several additional items to be recorded, in addition to the items required by the statute to be filed of record.

The Act requires that the following items must be filed of record in the office of the County Clerk for each county in which any portion of the mortgaged property is located (46 O.S. § 45.B.3):

(1)   Notice of Sale; (Note: Under the Act, the proper filing of the notice of sale is accorded the status of Lis Pendens Notice).

(2)   Affidavit concerning compliance with the notice of intent to foreclose;

(3)   Return of Service on each party or appropriate affidavits in lieu if personal service; and

(4)   Proof of Publication; 

In addition, the Company requires that the following also be recorded:

(5)   A copy of the written notice of intent to foreclose by power of sale; and

(6)   Proof of Mailing of the notice of intent to foreclose [e.g. a copy of the certified mail receipt, and an affidavit that notice was sent as indicated in receipt (Note: the Act does not require that the notice of intent be sent by certified mail return receipt requested)] 

Note: Items 5 & 6 may be satisfied by including same with the affidavit required in item 2 above. Alternatively, this requirement may be satisfied by including this information with the foreclosure deed or with a second affidavit obtained and recorded prior to the issuance of any title policy. A sample of such an affidavit which may be modified as needed is included below as Exhibit A.

(7)   Information about the actual date, time and place of the foreclosure sale; any postponements or continuances; mortgagor’s election against a deficiency judgment; mortgagor’s suggestion of property to be sold; and any other information relevant to the foreclosure, etc. 

Note: a sample of an affidavit which may be modified as needed to satisfy this requirement is included below as Exhibit A. This requirement may also be satisfied by similar recitations in the mortgagee’s foreclosure deed.

The reason for requiring items 5, 6 & 7 is to have the property record reflect sufficient information so that any title examiner can determine that there has been compliance with the Foreclosure Act by tracing the foreclosure procedure followed from the mortgage to the mortgagee’s deed.

(8)   Military Service. 

Requirements relating to the Servicemembers Civil Relief Act, 50 U.S.C. App § 501 et seq., as amended, are still applicable. Please refer to the bulletins and exception noted in the References section below. 

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

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