Guideline: ALTA Endorsement 11.2 (Mortgage Modification with Additional Amount of Insurance)

Explanation:

This endorsement is designed for issuance when a Mortgage Modification (“Modification”) is executed and additional insurance is requested.

This endorsement insures the lender against loss or damage sustained by the Insured by reason of: (a) the invalidity or unenforceability of the lien of the Insured Mortgage upon the Title as a result of the Modification; (b) the lack of priority of the lien of the Insured Mortgage over defects in or liens or encumbrances on the Title, except those in the policy and prior endorsements and except those set forth in the endorsement; and (c) the failure of specified matters to be subordinate to the lien of the Insured Mortgage.  The endorsement does not insure against creditors' rights issues arising out of the modification.

ALTA 11.2-06 is designed to be issued with a 2006 ALTA Loan Policy.  ALTA 11.2 (07-01-21) contains modifications to align the endorsement to the terms of the 2021 ALTA Loan Policy and is designed to be issued with the 2021 Loan Policy.  Where available, use the version of the endorsement designed for the applicable policy, unless approved by a Stewart Title Guaranty Company underwriter.  It is not necessary to indicate “-06” or the parenthetical (date) on the endorsement attached to the policy.

Underwriting Requirements:

1. Search the public records from the Date of Policy of the mortgage and secure a name search of the mortgagors and successors in ownership, if any. 

2. Require joinder in the modification by the current owners of the estate or interest in the land and require proof of authority by those signing on behalf of the current owners. 

3. If the mortgage covers a lease, require a current estoppel and consent by the lessor. 

4. Section 3.c refers to subordinate matters. If the existing policy reflects a mortgage or other lien in Schedule B, Part II (as subordinate), you must be furnished with a satisfactory current subordination to ensure that the intervening lien is subordinated to the Insured Mortgage as modified and increased by the Modification. Require a new subordination by the lienholder in order to refer to such item in Section 3.c. Otherwise, except to such item under Section 3.b of the endorsement. 

5. If your search reflects intervening matters such as mortgages, liens, covenants or easements, require subordinations or except to such items under Section 3.b of the Endorsement. 

6. If your search reflects a notice of bankruptcy by the owner, require a final nonappealable order authorizing the Modification. 

7. If your search reflects a partial release, reconveyance or discharge of the mortgage, except under Section 3.b of the endorsement. If your search reflects a full release, reconveyance or discharge, do not issue this endorsement. 

8. If your search reflects that the record mortgage holder is not the current lender on the Modification, require an assignment from that holder. 

9. Secure a current tax and assessment search. Except under Section 3.b of the Endorsement to unpaid taxes and assessments. 

10. Verify that the mortgage as modified does not secure advances for construction and that there has been no recent lienable work or improvement. 

11. Verify the parties in possession. If the Loan Policy does not contain an adequate exception, add an exception to those rights in Section 3.b of the Endorsement. 

12. Require a current survey, unless our survey guidelines do not require a survey, or unless you except to survey matters arising subsequent to Date of Policy. 

13. Record the Modification. 

14. The Date of Endorsement referenced in paragraph Section 1.b generally will be the date that the Modification is recorded. 

15. Standard exceptions for matters arising subsequent to Date of Policy should appear in Section 3.b unless they are cleared in your customary manner (e.g., by owner’s affidavit, where applicable). 

16. You should collect premium for the additional Amount of Insurance, in addition to the cost of issuing the Endorsement itself. The total Amount of Insurance should be inserted in Section 2.

17. There are two versions of this Endorsement. One version (designated “with exception for mortgage recording tax”) contains a Section 5, which excepts loss or damage by reason of the invalidity, unenforceability or lack of priority of the lien of the Insured Mortgage because all applicable mortgage recording or similar intangible taxes were not paid at time of recording of the Modification. One version (designated “without exception for mortgage recording tax”) does not contain an exception for mortgage recording taxes. In jurisdictions where there is no mortgage recording tax, or in jurisdictions where you can confirm that the appropriate mortgage tax has been paid for the increased amount of the mortgage, you may use the version without Section 5. Otherwise, use the version that contains Section 5.

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.