Bulletin: SLS2023006

Dear Associates:

This bulletin advises you of recent events regarding the failure of First Republic Bank, its takeover by the Federal Deposit Insurance Corporation (FDIC) as receiver, and underwriting guidance relating to transactions with this bank or the acquirer of substantially all its assets, JPMorgan Chase Bank, NA (JPMorgan Chase).

On Monday, May 1, 2023, First Republic Bank, located in San Francisco, CA was closed by the California Department of Financial Protection and Innovation. The FDIC was appointed as receiver. The FDIC entered into a purchase and assumption agreement with JPMorgan Chase to assume all the deposits and substantially all the assets of First Republic Bank.

The Current Situation

This is a new, evolving situation. There may be unanswered questions. There may be changes in guidance as the transfer procedures are implemented. Please keep accurate records regarding your communications with the JPMorgan Chase’s representatives and the FDIC.

Requirements

The following requirements apply, unless approved by a Stewart Title Guaranty Company Underwriter.

Payoff of Existing Loans

If you have received a payoff statement from First Republic Bank, obtain written confirmation from the FDIC or JPMorgan Chase that the amount, payee, and wiring instructions are the same as stated in the original payoff. Any changes to any of these must be independently verified, as described below.

Lien Releases for Paid Off Loans

If you have paid off a loan to First Republic Bank or you pay off a loan believed to have been transferred from the FDIC to JPMorgan Chase, please do not close the file until you have received: (a) a recordable assignment of mortgage instrument from the FDIC to JPMorgan Chase, (b) a recordable release/satisfaction/reconveyance, as applicable, from JPMorgan Chase, and (c) a recordable power of attorney authorizing the signer of any instrument as an attorney in fact. Please establish a tickler system for this. Please forward a copy of the assignment and satisfaction instruments to your underwriter. Please notify your underwriter if these documents are not received within a reasonable time period.

The FDIC also provides a dedicated web page to assist with obtaining a lien release where the loan was paid off to a closed bank, but the lien was not released: https://www.fdic.gov/resources/resolutions/bank-failures/failed-bank-list/lien/index.html

New Loans (Sales and Refinances)

Request written confirmation from JPMorgan Chase of its intention to proceed with the loan. Verify receipt of instructions from JPMorgan Chase (or ratification of the instructions previously received from First Republic Bank) and receipt of the loan funds from JPMorgan Chase.

Construction Loans (New and Existing)

Before issuing any loan policy insuring a construction loan, date down endorsement, or ALTA 33 Disbursement Endorsement to an existing loan policy insuring a construction loan, request written confirmation from JPMorgan Chase of its intention to continue funding the loan. You must obtain approval from a Stewart Title Guaranty Company Underwriter before issuing any loan policy insuring a construction loan, date down endorsement, or ALTA 33 Disbursement Endorsement.

Further Assignments

Insuring an assignment of a mortgage previously held by First Republic Bank, now held by JPMorgan Chase, requires: (a) a recordable assignment from the FDIC, with a recordable power of attorney, to JPMorgan Chase, and (b) a recordable assignment from JPMorgan Chase to the assignee, together with a recordable power of attorney, if applicable.

Scams

Given the fluid nature of the situation, there is a heightened risk of fraud related to transactions concerning these loans. Please be alert to possible scams, in particular payoff scams involving wire fraud. These may involve altered or fraudulent wiring instructions, among other scams. New wiring instructions from JPMorgan Chase, or changes in previously-received verified wiring instructions, must be independently verified through the FDIC’s authorized communications methods, available in the FAQs for each closed bank, or by communication with a verified loan officer at JPMorgan Chase.

FDIC Press Releases and FAQs

FDIC Press Releases relating to First Republic Bank and other failed banks are available at this website: https://www.fdic.gov/news/press-releases/2023/

FDIC FAQs relating to First Republic Bank are available at this website: https://www.fdic.gov/resources/resolutions/bank-failures/failed-bank-list/first-republic-faq.html

If you have questions about a transaction involving a bank closed by the FDIC, or other issues not addressed by this bulletin, please contact a Stewart Title Guaranty Company Underwriter.

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