Guideline: ALTA Short Form Residential Loan Policy - Current Violations (04-02-15)

Explanation:

The ALTA Short Form Residential Loan Policy - Current Violations (04/02/15) is issued to a lender making a loan secured by a one-to-four family residential property or condominium.

This Policy incorporates the terms of the 2006 ALTA Loan Policy (06-17-06).

This Policy incorporates by reference the Exclusions and Conditions contained in a standard 2006 ALTA Loan Policy form.  It contains a printed Schedule B which excepts to certain taxes and assessments, recorded restrictions, easements and servitudes, and minerals. However, affirmative insurance is given with regard to these matters as provided in Schedule B. Coverage may include loss or damage from violation of restrictions, damage from the use of easements, and damage to improvements from the exercise of mineral rights. Title risks that are unacceptable to the insurer are shown in an Addendum to the policy.

Schedule A of the ALTA Short Form Residential Loan Policy - Current Violations (04-02-15) provides for optional selection to incorporate the following ALTA Endorsements, if requested and if applicable:

• ALTA Endorsement 4.1-06 (Condominium);
• ALTA Endorsement 5.1-06 (Planned Unit Development);
• ALTA Endorsement 6-06 (Variable Rate Mortgage), if the Insured Mortgage contains provisions which provide for an adjustable interest rate;
• ALTA Endorsement 6.2-06 (Variable Rate Mortgage - Negative Amortization), if the Insured Mortgage contains provisions which provide for both an adjustable interest rate and negative amortization;
• ALTA Endorsement 7-06 (Manufactured Housing), if a manufactured housing unit is located on the Land at Date of Policy;
• ALTA Endorsement 7.1-06 (Manufactured Housing - Conversion; Loan)
• ALTA Endorsement 8.1-06 (Environmental Protection Lien) subject to the statutes, if any, shown in Schedule B specifically for this endorsement; and,
• ALTA Endorsement 9.10-06 (Restrictions, Encroachments, Minerals – Current Violations - Loan Policy);
• ALTA Endorsement 14-06 (Future Advance-Priority)
• ALTA Endorsement 14.1-06 (Future Advance -  Knowledge)
• ALTA Endorsement 14.3-06 (Future Advance – Reverse Mortgage)
• ALTA Endorsement 22-06 (Location) the type of improvement is a one-to-four family residential structure and the street address is as shown in Schedule A.
• ALTA Endorsement 30-06 (Shared Appreciation Mortgage).

These endorsements may be added merely by checking appropriate boxes in the policy form.

A desirable feature of the ALTA Short Form Residential Loan Policy is that it may be easily reviewed by the lender and requires reduced file space.

This ALTA Short Form Residential Loan Policy reduces the opportunity for errors, the time for delivery (since there is no need to wait for recording information), and the necessary time for review, since special exceptions do not appear unless an Addendum is included.

Fannie Mae, Freddie Mac, VA, HUD and many institutional lenders accept the ALTA Short Form Residential Loan Policy.

There are two current versions of the ALTA Short Form Residential Loan Policy.  ALTA Short Form Residential Loan Policy – Current Violations (04-02-15) and ALTA Short Form Residential Loan Policy and Addendum (12-03-12) provide many of the same coverages.  However, these two policy forms differ with respect to the coverage that they provide regarding the priority of the lien of the Insured Mortgage in relation to the priority of a condominium association's or homeowners association's lien for future unpaid charges and assessments. 

ALTA Short Form Residential Loan Policy – Current Violations (04-02-15) has optional ALTA Endorsements 4.1-06, 5.1-06 and 9.10-06.  These endorsements only insure against loss or damage if any charges or assessments of the association are due and unpaid at Date of Policy.

ALTA Short Form Residential Loan Policy and Addendum (12-03-12) has optional ALTA Endorsements 4-06, 5-06 and 9-06.  These endorsements insure against loss or damage if the association's lien for future charges and assessments is superior to the lien of the Insured Mortgage.

Underwriting Requirements:

You must:   

1.       This Policy incorporates the 2006 ALTA Loan Policy, which includes gap coverage to the date of recording. You do not need to wait for the recording information unless the closing instructions require that information on the Policy.  Absent the lender's instructions to the contrary, the policy may be dated and issued on date of settlement/closing if your requirements have been met, the funds have been disbursed and you are in a position to record.  Insert the settlement date as the Date of Policy in Schedule A; you do not need to show recording information unless requested.

2.       Record the mortgage on the same day that you issue the policy or at the latest, first thing the next morning or business day.  We advise that you establish a procedure for recording twice a day, if practical in your area.

3.       Charge the normal rates on Loan Policies for issuance of this Policy plus the applicable rate for the endorsements that are checked.

4.       Perform a general index search for the time period of the statute of limitations on judgments in your jurisdiction, and for the time period of the limitations on Federal judgments and Federal tax liens. Check taxes, assessments of all types, and other governmental charges. Be satisfied that there are no recent unpaid bills for improvements.

5.       Search: (1) one bona fide deed back if the grantee in that deed gave a purchase money mortgage to an institutional lender (e.g. not an individual seller); or (2) two bona fide deeds back if the grantee in the most recent deed did not give a purchase money mortgage to an institutional lender. A bona fide deed is a deed that appears to involve an arm's length sale (not a gift) between unrelated people.

6.       If you have a copy of a more recent title insurance policy (Owner's, Loan or Short Form Loan), you may rely on that policy and search forward from that prior policy.

7.       This Policy may insure a first lien or a subordinate lien. If insuring a subordinate lien, check the box for an Addendum and include any superior lien in the Addendum.

8.       You may issue this Policy on Fee Simple. If you are asked to issue the Short Form Residential Loan Policy on a Leasehold, please call our underwriting personnel.

9.       Issue this Policy only on one-to-four family residential property or condominium unit. The Land should be a platted lot or a metes and bounds tract not exceeding 25 acres. Otherwise, please call our underwriting personnel.

10.   Schedule A should show the Street Address of the Land.  You may use the address shown on the mortgage or other reasonable evidence, such as tax information.

11.   Schedule A should show the Loan Number.

12.   You do not need to specify any of the exceptions covered by the pre-printed exceptions in Schedule B.  You do not need to add an Addendum unless you have special exceptions for matters not otherwise excepted by the pre-printed form.  Examples of Addendum items include options, rights of first refusal, recorded notice of government violation or recorded notice of eminent domain proceeding, etc.  Do not remove such exceptions without Underwriter approval.

13.   Verify with the homeowner's association or condominium, if applicable, that assessments are paid current and that any right of first refusal will not be exercised in the current transaction (if there is a right of first refusal).

14.   Issue only if the lender is an institutional lender commonly making residential loans (do not issue if lender is an individual unless you obtain Underwriter approval).

15.   Do not issue if the loan is for construction or repair of improvements.  You must verify that all bills paid on any prior construction within lien period.

16.   No inspection or survey is required.

17.   You should not issue the ALTA Short Form Residential Loan Policy - Current Violations (04-02-15) in your state, unless Stewart has filed the policy or unless forms are available without filing.

18.   If ALTA Endorsements 4.1-06, 5.1-06 and/or 9.10-06 are checked, this policy does not insure that condominium and homeowner’s association liens for future assessments are subordinate to the Insured Mortgage. You should issue the ALTA Short Form Residential Loan Policy - Current Violations (04-02-15) in the following states and in any other state if a review the condominium declaration or restrictive covenants to shows that the property owner’s or homeowner's assessment liens for future assessments are superior  to the Insured Mortgage. The laws in the states below provide that the assessment lien may be superior, at least for several months of future assessments, over the lien of the Insured Mortgage.

States in which the ALTA Short Form Residential Loan Policy - Current Violations (4-02-15) must be issued, if it is available in the state:

Alabama

Alaska

Arkansas

Colorado

Connecticut

Delaware

District of Columbia

Hawaii

Maryland

Massachusetts

Minnesota

Missouri

Nevada

New Hampshire

New Jersey

Oregon

Pennsylvania

Puerto Rico

Rhode Island

Saipan

Tennessee

Vermont

Washington

West Virginia

If the Declaration or Restrictions provide that the assessment lien is superior to any mortgage, also issue the ALTA Short Form Residential Loan Policy - Current Violations (04-02-15) in the following additional states, if it is available in the state:

Arizona

California

Georgia

Idaho

Iowa

Montana

North Dakota

South Dakota

Wisconsin

Wyoming

In Oklahoma you must include the following exception in Schedule B, Part II of each Commitment in which the ALTA Short Form Residential Loan Policy – Current Violations (04-02-15) policy will be issued:

Exception from Coverage and Affirmative Insurances paragraph 4.b of the Policy and paragraph 4.c.ii. of any incorporated ALTA 9.10-06 will be deleted.

You must attach an addendum to the policy stating:

Exception from Coverage and Affirmative Insurances paragraph 4.b of the Policy and paragraph 4.c.ii. of any incorporated ALTA 9.10-06 are deleted.