Endorsements: Form 2075 Instructions

NOTES:

Coverage:  This endorsement ties two Loan Policies together. A lender may request two loan policies insuring two mortgages on different pieces of property where both mortgages secure the same note. Although the lender may want the Amount of Insurance on both policies to equal the amount of the mortgage and note, the lender does not want to pay for duplicative coverage because a foreclosure will only result in the amount due on the note.

For example, a lender holds a note in the amount of $300,000. The note is secured by two mortgages, each executed on a separate piece of property. Each mortgage recites the full amount of the note, $300,000. The lender requests a Loan Policy for each mortgage in the full amount of the mortgage, $300,000, but the lender will only be able to recover $300,000 in the event of a foreclosure, not $600,000. Therefore the title agent issues two Loan Policies, each with an Amount of Insurance of $300,000, and each with a Cross-Liability Endorsement attached.

Another reason to use two mortgages with one note is if there are properties located in two different counties, so two original mortgages will be needed to promptly record in each county. Those two mortgages could be separately insured on two policies, with the Cross-Liability Endorsement attached to each.

The Cross-Liability Endorsement ties together the two Loan Policies such that, if the lender recovers under one policy, the Amount of Insurance for the other policy will be reduced by the amount of the recovery.

Procedure: This endorsement may be issued on Loan Policies. To issue this endorsement, review and retain copies of the mortgages and verify that there is one promissory note. Make sure that the lender is requesting two policies, instead of one.

Insert the policy number of the policy to which you are connecting in the blank provided in the endorsement.

Questions? Contact an Underwriter.