2006 ALTA Endorsements

Roger TherienRegional Counsel – West Region

11/28/2006

Topics Covered All endorsements will be listed (See westregion.co

m) Certain ones will be discussed:

New Endorsements Modified Endorsements Confusing endorsements that deserve to be

discussed

Regular v. “-06” 45 ALTA endorsements. Includes as of 6/17/06: 8 new, 3 modified. Parallel set of 45 endorsements designated “-06”. The -06 endorsements match the 2006 policies. Both sets of endorsements are substantively

identical. Additionally, the JR1 and JR2 endorsements are

for the Limited Coverage Residential Loan Policy.

New and Modified Endorsements 7.1 Manufactured Housing Unit–Conversion: Loan 7.2 Manufactured Housing Unit–Conversion: Owner 9 Restrictions, Encroachments & Minerals–LOAN 9.1 Restrictions, Encroachments, Minerals–unimproved–OWNER 9.2 Restrictions, Encroachments, Minerals–improved–OWNER 9.3 Restrictions, Encroach., Minerals–LOAN–Future Imp–Mineral

Extraction 9.4 Restrictions, Encroach., Minerals–unimproved–OWNER–Future

Imp–Mineral Extraction 9.5 Restrictions, Encroach., Minerals–improved–OWNER–Future

Imp–Mineral Extraction 14.3 Future Advance – Reverse Mortgage 22 Location 22.1 Location and Map

1 Street Assessments Lien of assessments for street improvements

under construction or completed at Date of Policy not excepted in Schedule B.

2006 Loan Policy: 11. The lack of priority of the lien of the Insured

Mortgage upon the Title . . . (b) over the lien of any assessments for street improvements under construction or completed at Date of Policy.

2 Truth in Lending Any final judgment . . . that . . . the lien of the

insured mortgage has been . . . defeated by a valid exercise of the right of rescission conferred by the Federal Truth in Lending Act . . .

Basically, guidelines allow issuance only when lender does not need it because TILA clearly does not apply (borrower is an entity or loan is for business purposes).

3 Zoning – Unimproved Land The Company insures the Insured against loss or

damage sustained in the event that, at Date of Policy:1. According to applicable zoning ordinances and amendments thereto, the land is not classified Zone __________.2. The following use or uses are not allowed under that classification: _____________

3.1 Zoning – Improved Land Same as 3, plus: Insurance against violations as to type of

structures, land area, floor space, setbacks, height of structures, number of parking spaces.

4 and 4.1 Condominium Numerous coverages insuring that condo is validly

created and in compliance with CC&R’s. 4: Insures against priority of any lien for charges

and assessments over the lien of the insured mortgage.

4.1: Insures against priority of the lien for charges and assessments due and unpaid at Date of Policy.

4 and 4.1 Condominium (Cont.) Why the difference? NV Revised Statutes 116.3116: The [homeowner

association’s] lien is also prior to [a first security interest on the unit recorded before the date on which the assessment became delinquent] to the extent of the assessments [that became due] during the 6 months immediately preceding institution of an action to enforce the lien.

4 and 4.1 Condominium (Cont.) HI Revised Statutes 514A-90 (g) . . . [A]n association . . .

may specially assess the amount of the unpaid regular monthly common assessments . . . against a person who, in a judicial or nonjudicial . . . foreclosure, purchases a delinquent apartment . . .

(h) The amount of the special assessment assessed under subsection (g) shall not exceed the total amount of unpaid regular monthly common assessments that were assessed during the six months immediately preceding the completion of the . . . foreclosure. In no event shall the amount of the special assessment exceed the sum of $1,800.

4 and 4.1 Condominium (Cont.) So . . . In HI and NV, do not issue the 4, which insures

against the priority of any lien for assessments. In those states, issue the 4.1, which only insures

against the priority of assessments that are due and unpaid at Date of Policy.

5 and 5.1 Planned Unit Devel. Exact same language as in the 4 and 4.1. So . . . In HI and NV, do not issue the 5, which insures

against the priority of any lien for assessments. In those states, issue the 5.1, which only insures

against the priority of assessments that are due and unpaid at Date of Policy.

6 Series Variable Rate 6: Variable Rate 6.1: Variable Rate, Regulation – NO LONGER

USED. 6.2: Variable Rate, Negative Amortization

I think 6.1 was eliminated because it contained an unworkable exception: “The endorsement does not insure against loss or damage by reason of the failure of the insured to comply with the following statutes or regulations concerning variable rate mortgages: __”

All have an exception for usury, consumer credit protection and truth in lending laws.

7 Series Manufactured Housing 7: Manufactured Housing Unit

“Land” includes manufactured housing unit 7.1: MHU – Conversion – Loan 7.2: MHU – Conversion – Owner

The 7.1 and 7.2 provide the same coverage as the 7, plus enhanced coverages relating to conversion, including specific insurance that the MHU is real property.

8.1 Environmental Lien No change.

Revised Comprehensive Forms The Comprehensive FormsALTA Restrictions, Encroachments, and Mineral Endorsement

9 for Loan Enhanced version: 9.3 9.1 for Owner – Unimproved Enhanced version: 9.4 9.2 for Owner – Improved Enhanced version: 9.5

As used in paragraphs 1.a. and 5, the words “covenants, conditions or restrictions” do not include any covenants, conditions or restrictions [Delete: “relating to environmental protection.”] (a) relating to obligations of any type to perform maintenance, repair or remediation on the Land, or (b) pertaining to environmental protection of any kind or nature, including hazardous or toxic matters, conditions or substances, except to the extent that a notice of a violation or alleged violation affecting the Land has been recorded or filed in the Public Records at Date of Policy and is not excepted in Schedule B.

NEW Comprehensive Forms – 9.3

9 v. 9.3 (Loan) Coverage for damage from exercise of right

of surface entry: 9: Damage to existing improvements . . . 9.3: Damage to improvements located on

the Land on or after Date of Policy . . . BOTH: including lawns, shrubbery, or trees

NEW Comprehensive Forms – 9.49.1 v. 9.4 (Owner – Unimproved) Coverage for damage from exercise of right

of surface entry: 9.1: Damage to buildings . . . constructed

after Date of Policy 9.4: Damage to improvements . . .

constructed after Date of Policy (excluding lawn, shrubbery, or trees)

NEW Comprehensive Forms – 9.5

9.2 v. 9.5 (Owner – Improved) Coverage for damage from exercise of right

of surface entry: 9.2: Damage to existing buildings . . . 9.5: Damage to improvements located on

the Land on or after Date of Policy . . . (excluding lawns, shrubbery, or trees)

10 – 13 10: Assignment of Mortgage 10.1: Assignment of Mortgage (with priority

coverage – date down) 11: Modification of Mortgage 12: Aggregation (Tie-In) 13: Leasehold – Owner 13.1: Leasehold – Loan

14 Series 14: Future Advance – Priority 14.1: Future Advance – Knowledge 14.2: Future Advance – Letter of Credit 14.3: Future Advance – Reverse Mortgage

Quite a bit of demand for this kind of endorsement

15 - 17 15: Nonimputation – Full Equity Transfer 15.1: Nonimputation – Additional Insured 15.2: Nonimputation – Partial Equity Transfer 16: Mezzanine Financing 17: Access and Entry 17.1: Indirect Access and Entry

18 - 21 18: Single Tax Parcel 18.1: Multiple Tax Parcel 19: Contiguity – Multiple Parcels 19.1 Contiguity – Single Parcel 20: First Loss – Multiple Parcel Transactions 21: Creditor’s Rights

22 Series 22: Location

Insures that an improvement with a specified address is located on the Land

22.1: Location and Map 22 coverage plus the attached map, if any,

shows location and dimensions of land according to the Public Records.

Identical to CLTA 116

Short Form Lim. Cov. Jr. Loan Policy JR1: Supplemental Coverage (Date Down) JR2: Revolving Credit / Variable Rate

No “-06” versions because there is no 2006 version of this policy.