Guideline: ALTA Residential Limited Coverage Mortgage Modification Policy (4-2-22)

Explanation:

This policy insures the lender against loss or damage by reason of: (1) the invalidity or unenforceability of the lien of the Identified Mortgage upon the Title at the Date of Policy, and (2) the loss of priority of the lien of the Identified Mortgage, at the Date of Policy, over any lien or encumbrance on the Title that has been created, attached, filed or recorded in the Public Records subsequent to the date the Identified Mortgage was recorded in the Public Records.

This policy includes Exclusions with respect to: (1) any invalidity, unenforceability, or lack of priority of the Identified Mortgage or the Modification, subject to the coverage provided under the Covered Risks, (2) the status or ownership of the Title, (3) matters not recorded or filed in the Public Records at the Date of Policy, (4) any usury or Consumer Protection Law, and (5) any creditors’ rights or similar claims arising out of the transaction creating the Modification.

This policy is intended for a modification of an institutional mortgage previously insured as having first priority where the original lender and the borrower are the same, and no new principal is secured.

Underwriting Requirements:

(1) Applicability: This policy should not be issued unless:

(a) the prior mortgage was insured by a Loan Policy, whether or not issued by the Company. You should obtain a copy of the prior Loan Policy;

(b) the current owner/mortgagor is the same as the mortgagor named in the mortgage;

(c) the lender is an institutional lender and is the same as the mortgagee named in the mortgage (i.e., there has been no change of ownership of the loan); and

(d) the property is improved with an existing 1-4 family owner-occupied residence (including an owner-occupied residential condominium unit) encumbered solely by an institutional mortgage previously insured as having first priority.

(2) Searches:

(a) You must search the Public Records from the date of recording of the mortgage to the Date of Policy, including a customary name search of the owner/mortgagor in the Public Records.

(b) You do not need to perform a current tax and assessment search.

(3) If your search discloses any of the following, do not issue this policy without Underwriter approval:

(a) any intervening matters such as mortgages, mortgage modifications, liens, covenants or easements, etc., between the recording of the mortgage and the Date of Policy;

(b) a notice of bankruptcy by the owner/mortgagor;

(c) a partial or full release, reconveyance or discharge of the mortgage; or

(d) that the record mortgage holder is not the current lender on the Modification.

(4) Do not issue this policy if the mortgage as modified secures:

(a) additional property;

(b) a lease; or

(c) a new or restated mortgage.

(5) Unless otherwise approved by an Underwriter, the Amount of Insurance for this policy must be the lesser of:

(a) the amount stated in the mortgage (i.e., there should be no increase in the principal amount secured by the mortgage as modified); and

(b) the current unpaid balance.

(6) The Modification must be in recordable form, and it must be recorded.

(7) In jurisdictions where there is a mortgage tax, confirm that the mortgage tax calculation appears to be correct and that the appropriate amount of mortgage tax, if any, was paid at the time of recording of the Modification.

(8) Do not issue this policy if a subordination was required in connection with the issuance of the prior Loan Policy for the mortgage, unless the subordinated mortgage has been released or you obtain Underwriter approval.

(9) This policy does not require a property description. Complete Schedule A by inserting a description of the mortgage (title, parties, date, recording information) and the Modification (title, parties, date, recording information). This policy is not designed to contain a Schedule B.