Bulletin: SLS2024013

Dear Associates:

An Attorney Opinion Letter (AOL) is being used in lieu of title insurance in some residential loan transactions. Fannie Mae and Freddie Mac have approved its use as a substitute for a lender’s title insurance policy under certain conditions if the opinion indemnifies the lender and its successors in interest. Because of the requirements and structure of the AOL, it may violate monoline (single type of insurance) and other insurance laws.

A transaction involving an AOL may include a Settlement Agent Agreement and a Closing Indemnification Letter (for the settlement and disbursement of funds). These documents may subject a participant to additional legal exposure.

Stewart Title Guaranty Company (STGC) does not participate in the AOL program.

No documents, including but not limited to closing instructions and commitments, produced in connection with an AOL transaction may refer to Stewart Title Guaranty Company or “Stewart Title” more generally.

Because an STGC title insurance policy is not requested in the AOL program, you may not issue an STGC Closing Protection Letter.

An STGC owner’s policy shall not be issued in connection with a transaction involving an AOL.

If you contemplate participating in an AOL program, you should seek independent legal advice as to whether the AOL complies with the requirements for the practice of law and whether it and the settlement comply with state insurance and other laws.

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