Endorsements: Form 2105-06 Instructions

NOTES:

Coverage: This endorsement provides a way to insure a mortgage modification instrument on the Loan Policy for the existing insured mortgage. It insures the validity and enforceability of the mortgage modification instrument. It insures the priority of the lien of the mortgage and provides a space to add any exceptions that may be needed since the Date of Policy on the original Loan Policy.

This endorsement does not provide coverage against the modification being a fraudulent conveyance or a fraudulent transfer. It further does not provide coverage against the modification being deemed a preferential transfer, unless it is not recorded within 30 days of execution, or unless it fails to provide notice to a bona fide purchaser for value or to a judgment or lien creditor.

This endorsement is the ALTA 11-06 form.

Procedure: This endorsement may be issued on Loan Policies. Lenders may occasionally request that you insure a mortgage modification by updating a Loan Policy you issued on the original mortgage. A mortgage modification is a document that seeks to change an original, recorded mortgage. Sometimes lenders will change the terms of the original mortgage substantially in the modification, altering the interest rate, the time period for payments, and/or the amount due. When lenders make these changes, they often are effectively refinancing the loan without releasing the original mortgage and recording a new mortgage.

To provide insurance to the lender for a mortgage modification, observe the requirements and guidelines, below.

Requirements:

1. The lender must have an ATG Loan Policy for the mortgage being modified.
2. The mortgage modification document must be recorded within two days of execution and your later date search must reveal the recorded modification, properly indexed, in the correct county.
3. The owners must indicate that they have not had any construction, remodeling, or improvements done to the property since the original Loan Policy. If they have, then you must add Standard Exception 4 to the endorsement.
4. The title must show no intervening liens between the recordings of the original mortgage and the mortgage modification document; or, if there are liens, the owners must pay them off.
5. For properties located in Illinois or Indiana, calculate ATG’s premium for mortgage modifications using the Refi Rates, plus search and recording fees, as applicable.

Guidelines:

1. Conduct or obtain a new search from the date of the original Loan Policy through the date the mortgage modification document was recorded.
2. Obtain payoffs for any intervening liens found in the search report.
3. Obtain a new ALTA Statement, signed by the owners and notarized. If new money is disbursed, have the lender sign the Lender’s Disbursement Statement.
4. Obtain new survey information through either an Affidavit In Lieu of Survey or an Affidavit of No New Improvements together with providing a copy of the original survey, depending on the county where the property is located.
5. Confirm that there has been no new construction subsequent to the original mortgage.
6. Complete this endorsement with the date and recording information for the modification. Review the modification to verify that it will be valid and enforceable, with the names of the mortgagors and mortgagee, the correct legal description and notarized signature(s) of the mortgagor(s).
7. If there are any intervening liens or encumbrances that you have not obtained a payoff for, list them as new exceptions in paragraph 2 of the endorsement.
8. Follow ATG’s standard underwriting guidelines and procedures in examining your search results, copies of documents and raising exceptions.
9. Remit a copy of your endorsement with an Accounting Information Schedule and the premium to ATG.
10. Save copies of all documents in your title file for the original Loan Policy.

Questions? Contact an Underwriter.