Guideline: ALTA Junior Loan Policy - Residential Limited Coverage 1996 and ALTA Residential Limited Coverage Junior Loan Policy Revised 08-01-12

Explanation:

The ALTA Residential Limited Coverage Junior Loan Policy insures against loss or damage incurred by reason of the following matters:

(1) the Grantee named in the policy not being the named grantee on the last document purporting to vest the title recorded in the Public Records;

(2) the Land described in the policy not being the same as the land described in the last document purporting to vest the title recorded in the Public Records;

(3) any Monetary Liens recorded in the Public Records; and

(4) any ad valorem taxes or assessments of any governmental taxing authority that constitute a lien on the title and that appear in the official ad valorem tax records where the Land is located.

The ALTA Residential Limited Coverage Junior Loan Policy provides defense costs as stated. It also insures a later owner of the debt secured by the insured's mortgage. The Policy does not insure the validity of the insured's mortgage and it does not insure that the Grantee (who will generally be the mortgagor) owns the Land.  

This Policy is designed to be issued before the Junior Mortgage is executed.

Underwriting Requirements:

(1) Search: You must search: (A) back to the date of the execution of the last deed involving a sale for recorded "Monetary Liens" against the Land, and (B) for the period of local custom (but not less than 10 years) for general liens (such as tax liens and judgment liens) against the "Grantee" named in the policy (i.e., the persons named as the grantee(s) in the last recorded deed). You also must search for the last deed purporting to convey the Land to determine the "Grantee." You must secure a current tax and assessment search to reflect the current tax information.

(2) Amount of Insurance: Insert the amount requested by the lender; it should be the proposed loan amount. Do not issue this Policy without underwriter approval if the Amount of Insurance will exceed $200,000.

(3) Name of Insured: Insert the name of the proposed lender that will receive a junior mortgage. Do not issue the ALTA Residential Limited Coverage Junior Loan Policy without underwriter approval unless the Insured is an institutional lender. Do not issue to an individual without underwriter approval. Do not add "its successors and assigns" without underwriter approval.

(4) Date of Policy: Insert the date through which you examined title before issuing the ALTA Residential Limited Coverage Junior Loan Policy. This date generally precedes the date of issuance of the insured's mortgage. The ALTA Residential Limited Coverage Junior Loan Policy does not provide gap coverage. Do not insert the current date unless your search actually runs to and includes the current date. Datedowns and gap coverage, if any, are provided by ALTA Endorsement JR 1.

(5) Grantee: Insert the names of the owner according to the last conveyance (generally, a deed) in your local Public Records. You must search only for the last recorded deed. The ALTA Residential Limited Coverage Junior Loan Policy does not insure that the Grantee owns the land. If the last deed purports to convey undivided interests, you must show the other "Grantees" of the remaining undivided interests. Some insureds may require that the ALTA Residential Limited Coverage Junior Loan Policy refer to the deed; if so, you may add after the name of the "Grantee" a descriptive phrase such as "pursuant to deed dated [here insert deed date] from [name of grantor] recorded [here insert date of recording and recording information].” You may attach the deed if requested; however, the ALTA Residential Limited Coverage Junior Policy does not require that you attach the deed or Monetary Liens.

(6) The land referred to in this policy is described as follows. Insert the legal description of the Land. You must verify that this description also is the same description appearing in the deed to the "Grantee." If your insured requires a reference to the Property Address on the ALTA Residential Limited Coverage Junior Loan Policy, you may add after the description of the Land a descriptive phrase such as "Property address of the land is:_______.” However, prior to adding a reference to the address, you must review the tax search or tax certificate to confirm the property’s address.

(7) Exceptions: You must show all outstanding recorded monetary liens under the "Exceptions" Section. Monetary liens include judgment liens, child support liens, federal tax liens, state and local tax liens, other governmental liens, mortgages, deeds to secure debt, deeds of trust, and notices of overdue subdivision, homeowner’s association or condominium maintenance assessments. Monetary liens do not include covenants, conditions and restrictions, condominium declarations or easements. Monetary liens do include specific recorded notices of overdue assessments. You need only to search for outstanding recorded monetary liens (1) recorded on or after the date of the execution of the last deed involving a sale (generally this is the deed to the Grantor), or (2) against the Grantor according to your general name search (for judgments, tax liens, etc.) for the period of local custom (but no less than 10 years). If you do not have enough room on the form, you may refer to and attach an Addendum or Exhibit. You may attach copies of the recorded Monetary Liens if your insured requests, but this Policy does not require that copies be attached. As a courtesy to the insured, you may show as an Exception or in a separate letter to the insured a lis pendens or notice of bankruptcy recorded after the deed to the Grantee; however, the Policy does not insure as to these matters.

(8) Tax Information: You must secure a tax and assessment search. You must show all taxes and governmental assessments that are a lien on the title according to the search. If the current year's taxes are not known but are a lien, you may except to "taxes for the year ____, not yet due and payable," in order to accommodate the insured. You may show additional tax information if requested by your insured, such as Tax Parcel Number, Assessed Value of Land/Improvements, Exemptions (including Type and Amount), and Amount of Taxes for prior years. If you do not have enough room on the form, you may refer to and attach an Addendum or Exhibit.

(9) If you are asked to issue this policy, do not issue a commitment. Prior to issuing this policy, confirm with the customer (i.e., the representative of the prospective insured lender) that a commitment will not be issued. Also, prior to issuing the policy, confirm with the customer the amount of premium to be charged for this policy, and the expectation that the premium will be due upon issuance of this policy.

The underwriting guidelines contained herein have been provided for general reference. The facts, circumstances, and location of the subject property should be considered when determining the issuance of the requested form or endorsement. Please note that all of the forms and endorsements included in this system may not be available in all states. Accordingly, please contact the appropriate Stewart Title Guaranty Company underwriting personnel in order to determine availability.

Compliance with the underwriting guidelines contained herein in no way obligates Stewart Title Guaranty Company to issue any form or endorsement.