Bulletin: NJ2011001

Dear Associates:

The Department of Banking and Insurance has approved the following amendments to the Forms Manual and the Rate Manual effective June 30, 2011:

1. NJRB 1-16 Homeowners Policy: Substantive changes include an exclusion of coverage if the transfer of title is deemed to be a preferential transfer or fraudulent transfer under federal bankruptcy or state solvency or creditors rights laws. In addition there is a change to allow for continuation of coverage if title is transferred to a trustee or any estate planning entity after the policy date. In addition there have been some non substantive grammatical changes to the form.
    
2. NJRB 2-11 Expanded Coverage Loan Policy: Substantive changes include an exclusion of coverage if the transfer of title is deemed to be a preferential transfer or fraudulent transfer under federal bankruptcy or state solvency or creditors rights laws. Additionally ALTA references are removed as this is a New Jersey variation. N.J.S.A. 58:10-23.11 et seq (the Spill Compensation and Control Act) is referenced. In addition there are grammatical modifications to the form.
    
3. NJRB 2-14 Short Form Residential Loan Policy: While most changes to this form are stylistic or grammatical in nature, Schedule B item 2 is modified to read as follows:  

Covenants, conditions and restrictions, if any, appearing in the Public Records, but not including any covenant, condition or restriction based on race, color, religion, sex, handicap, familial status, sexual orientation or national origin, unless and only to the extent that said covenant (a) is exempt under Chapter 42, Section 3607 of the United States Code, or (b) related to handicap but does not discriminate against a handicapped person. (this does not modify or limit the coverage provided in Covered Risk 9, 10, 11(c) or 17.)  

4. NJRB 5-48 Mortgage Assignment-Policy Update. An exception is added for Federal Bankruptcy, State insolvency and creditor’s rights. The endorsement also provides in order for the endorsement to be effective that at the date of the endorsement the note or notes secured by the insured mortgage have been endorsed and delivered to the assignee.
    
5. NJRB 5-101 and NJRB 5-102 ALTA 10-06 Assignment and ALTA 10.1-06 Assignment and Date Down. Modifications to this form clarify that the insured is the Assignee and now exclude creditors rights coverage.
    
6. NJRB 5-109 Future Advance and 5-110 Future Advance-Reverse Mortgage are modified to add an informational note relative to bracketed material stating that the language within the bracket is optional.
    
7. NJRB 5-127 Easement-Damage or Enforced Removal. This form has had some stylistic changes to incorporate the following language, "if the exercise of the granted or reserved rights to use or maintain the easement(s) referred to exception(s) __________ of Schedule B results in:" The following language is removed from the form, "as a result of the exercise of the right to use or maintenance of the easement referred to in exception __of Schedule B for the purpose for which it was granted or reserved".
    
8. NJRB 5-129 and 5-130 Interest Rate Swap Endorsement-Direct Obligation and Interest Rate Swap Endorsement-Additional Interest respectively. These endorsements replace NJRB 5-59 (which is now withdrawn). Both endorsements carry a charge of 5% of the standard underwriting rate if issued at the time the underlying policy issued or 10% of the standard rate if issued subsequent thereto. There is a minimum charge of $100.00.
    
9. NJRB 5-131 Shared Appreciation 1-4 Family. This form replaces NJRB 5-60 (now withdrawn) and provides coverage for shared appreciation mortgages on 1-4 family properties. It provides coverage against loss of priority resulting from the provisions of the mortgage related to shared appreciation. The underwriting charge for this endorsement is 5% of the standard underwriting rate with a minimum $100.00 charge.
    
10. NJRB 5-132 Non Residential Shared Appreciation. This form replaces the NJRB 5-60 (now withdrawn) and provides coverage for shared appreciation mortgages on commercial properties. It provides coverage against loss of priority resulting from the provisions of the mortgage related to shared appreciation. The underwriting charge for this endorsement is 10% of the standard underwriting rate with a minimum $100.00 charge.
    Please be sure to use the revised forms. Feel free to contact the New Jersey Office should you have any questions. 

As a reminder, agents using AFW should contact PropertyInfo Customer Care to get the new rate changes implemented in their AFW system. 

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