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Bulletin: GA2013007

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Bulletin: GA2013007

Bulletin Document
V 2
Date: August 22, 2013
To: All Georgia Issuing Offices
RE: RATES AND/OR FORMS UPDATE - RATES - Proper Calculation of Simultaneous Issue Rates

Dear Associates:

The following examples are illustrative of the proper calculation of title insurance simultaneous issue charges in accordance with Stewart Title Guaranty Company's "All Inclusive Schedule of Charges for Use in the State of Georgia effective September 1, 2013".

The proper calculation of the simultaneous issue charge for owner's and loan policies in accordance with Residential Section 7(A) pages 4-5 of the "Schedule of Charges” is as follows:

I.  "When an owner's and loan policy are issued simultaneously in connection with a single transaction and covering identical land, the charge for the loan policy will be at the original charge. The charge for an owner's policy of greater value will be for the face amount of the owner's policy at the original charge, less the charge made for the loan policy, plus a $100 charge for issuance of the extra policy."

A. Simultaneous Issuance of Residential Standard Owner's Policy and Loan Policy

A property is purchased for $1,024,000 and simultaneously a first mortgage of $950,000 and a second mortgage of $50,000 are obtained. The owner has asked for the ALTA Standard Owner's Policy (2006).

Example:

$950,000 first loan policy

 

$50,000 second loan policy

 

$1,024,000 standard owner's policy

 

 

 

$2,070.00 original charge for first loan policy

 

$3,064.80 original charge for standard owner's policy

 

Calculation: $3,064.80 - $2,070.00 + $100.00 = $1,094.80

   

Second Mortgage Policies, Section 6 of the "Schedule of Charges, sets forth the proper calculation of the premium for a second loan policy in the amount of $50,000.  

$0 - $100,000

$3.00 per thousand

=

$150.00

Calculation: ($50,000 divided by thousand) x $3.00= $150.00

 

Total Charges:

$2,070.00 firstloan policy

 

 

$1,094.80 standard owner's policy

 

 

$150.00 second loan policy

B. Simultaneous Issuance of Residential Enhanced Owner's Policy and Loan Policy

A property is purchased for $300,000 and simultaneously a first mortgage of $250,000 is obtained. The owner has asked for the ALTA Enhanced (Homeowners) Owner's Policy. 

Example:

$250,000 loan policy

 

 

$300,000 enhanced owner's policy

 

 

 

 

 

$607.50 original charge for loan policy

 

$1,212.00 original charge for enhanced owner's policy

 

Calculation: $1,212.00 - $607.50 + $100.00 = $704.50

 

Total Charge:

$607.50 loan policy

 

 

$704.50 enhanced owner's policy

     

II.  The charge for an owner's policy of lesser value will be for the face amount of the owner's policy at the original charge, less the charge for a loan policy calculated at the value of the owner's policy, plus a $100 charge for the issuance of the extra policy.

A. Simultaneous Issuance of Residential Enhanced Owner's Policy and Loan Policy 

A property is purchased for $150,000 and simultaneously a first mortgage of $200,000 is obtained. The owner has asked for the ALTA Enhanced (Homeowners) Owner's Policy. 

Example:

$200,000 loan policy

 

 

$150,000 enhanced owner's policy

 

 

 

 

 

$495.00 original charge for loan policy

 

$636.00 original charge for enhanced owner's policy

 

$382.50 original charge for a loan policy of $150,000

 

Calculation: $636.00 - $382.50 + $100.00 = $353.50

 

Total Charge:

$495.00 loan policy

 

 

$353.50 enhanced owner's policy

     

All policies must bear the same effective date and the owner's policy must show the mortgage or lease as an exception. The owner's policy should be issued for the purchase price of the property.

_ _ _ _

The proper calculation of the simultaneous issue charge for owner's and construction loan policies in accordance with Residential Section 8, pages 5-6 of the "Schedule of Charges", is as follows:

EXAMPLE 1: A builder purchases a subdivision lot for construction of a single-family residence and pays $35,000 for the land.

(1) If the builder wishes to purchase only an owner's insurance to cover the $35,000 land acquisition, he pays for the insurance at the basic rate schedule is $3.70 per thousand for the first $100,000 of insurance with a minimum charge of $150.00 for an owner's policy. If at a later time, he obtains a $475,000.00 construction loan, the charge for the construction loan policy at the basic schedule is $1.25 per thousand or $593.75.

(2) If the builder wishes to purchase an standard owner's policy for $510,000 to cover the cost of the land plus improvements ($35,000+$475,000) simultaneously with a construction loan policy,  the original charge for owner's pricing is charged on the owner's policy and the simultaneous fee of $100 is charged for the construction loan policy.

Example:

$475,000 construction loan policy

 

 

$510,000 standard owner's policy

 

 

 

 

 

Total Charge:

$100.00 charge for construction loan policy

 

 

$1,677.00 charge for standard owner's policy

     

(3) If the construction loan policy is issued simultaneously with an owner's policy of lesser value, the original charge for owner's policy pricing is charged on the owner's policy amount and the construction loan charge of $1.25 per $1,000 of coverage is charged for the construction loan policy.

Example:

$475,000 construction loan policy

 

 

$35,000 standard owner's policy

 

 

 

 

 

Total Charge:

$593.75 charge for construction loan policy

 

 

$150.00 minimum charge for standard owner's policy

     

_ _ _ _

The proper calculation of the simultaneous issue charge for two owner's policies in accordance with Residential Section 7(B), page 5 of the "Schedule of Charges", is as follows:

When two owner's policies (each covering the entire fee in identical land) are issued in the same transaction to different insurers, the applicable owner's charge will apply to the policy in the larger amount and the charge on the other policy will be computed at thirty percent (30%) of the original owner's charge, with a minimum charge of $150 per policy.

A residential property is purchased for $1,380,000 by Jane Doe and Jack Smith in fee simple. Jack and Jane would like separate standard owner's policies.

Example:

$1,380,000 first standard owner's policy

 

$1,380,000 second standard owner's policy

 

 

 

 

Total Charge:

$4,026.00 charge for first standard owner's policy

 

 

$1,207.80 charge for additional standard owner's policy

    

The rates and calculation of charges in the new Schedule of Charges effective September 1, 2013, are the rates and calculation of charges that all Issuing Offices are required to charge the consumer and upon which Issuing Offices must remit.

Issuing Agents shall distribute this bulletin to all attorneys, paralegals and other staff involved in residential real estate transactions in your office where a Stewart title policy will be issued for their review.

If you have questions relating to this bulletin, please contact your local underwriter Dawn Lewallen at 678-262-4589 (dalewall@stewart.com), or Stewart Legal Services.

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

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.

References