Bulletin: CA2024006

Dear Associates:

This bulletin establishes basic guidelines in connection with transactions where the beneficial interest in a security instrument (e.g., Deed of Trust) has been established in undivided interests among five or more investors.

Fractional Beneficial Interests is defined to mean an interest in a security instrument held by more than one beneficiary, whether an individual or entity; a husband and wife will be considered as one interest.

Any transaction involving between five (5) and ten (10) Fractional Beneficial Interests will require approval from an STGC underwriter. Though rare, transactions involving eleven (11) or more Fractional Beneficial Interests may be considered on a case-by-case basis and would require approval from an STGC Senior Underwriter and/or approval from the STGC Senior Underwriting Committee.

Primary concerns when insuring a transaction involving Fractional Beneficial Interests include (i) possession of the note, and (ii) State or Federal Securities violations. To address these concerns, the following Multi-Beneficiary Exception must be included in Schedule B of the loan policy to be issued:

As to each and/or any Insured, any impairment, loss, or failure of title to the beneficial interest of the Insured in the Insured Mortgage resulting from:

a. Lack of possession by the Insured of the original promissory note secured by the Insured Mortgage;
b. The absence from the original promissory note of a proper endorsement to an Insured acquiring any beneficial interest in the Insured Mortgage through assignment; or
c. Any claim, allegation, or determination, as to each and/or any Insured, that the beneficial interest insured herein, or the underlying transaction involves the sale of a Security and/or is in violation of State or Federal Securities Laws.

Assignment of Beneficial Interest

A request to issue an assignment endorsement in connection with an assignment of the existing beneficial interest(s) to Fractional Beneficial Interests, must comply with the following:

a. The assignment must be of all the existing beneficial interest (i.e., 100%);
b. An assignment to five (5) or more Fractional Beneficial Interests requires approval from an STGC underwriter.
c. The CA-STG Modified CLTA 104.10 Endorsement - Assignment of Mortgage is to be issued in lieu of the CLTA 104.10.
d. The issuance of any other similar or comparable assignment endorsement requires approval from an STGC underwriter (e.g., ALTA 10 Series).

Any request to insure or endorse an existing policy in connection with an assignment of less than all of the beneficial interest (i.e., partial assignment of less than 100% of the beneficial interest) requires approval from an STGC underwriter.

There may be transactions under which the beneficial interest is held by a trustee under trust for the benefit of numerous beneficiaries; special care should be taken to only name the trustee of the named trust as insured and not the beneficiaries under the trust.

Please submit your STGC underwriting request by completing a Request for Approval to Issue Overlimits (Large) Policy or Extra Hazardous Coverage form and then emailing it to: policyapprovalrequest@stewart.com.

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

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