Explanation:
The LA ALTA Expanded Coverage Residential Loan Policy (Rev 02/03/10) is similar to the Homeowner's Policy of Title Insurance (1/1/08). This version includes a creditors' rights exclusion that is consistent with the Covered Risks. The Expanded Coverage Residential Loan Policy includes the following standard coverages (Covered Risks):
Revolving credit coverage for future advances.
Modification coverage that automatically covers advances made or changes in the interest rate subsequent to a modification of the insured mortgage after Date of Policy.
Zoning coverage (similar to ALTA Endorsement 3.1-06).
Building permit coverage (without any separate cap or deductible).
Subdivision Map Act coverage.
Post-policy forgery coverage of the lender's signature on enumerated documents.
Location coverage of street address and residence.
Tax parcel coverage insuring that the land is not taxed with other property.
Survey coverage that includes coverage with respect to post-policy encroachments.
Coverage against damage to improvements from use of surface for extraction of minerals, water or other substances (similar to coverage included in ALTA 9.3-06).
Coverage against supplemental real estate taxes.
Usury coverage if the Insured Mortgage is insured as a first mortgage.
Coverage of perimeter boundaries of map, if any map is attached.
Insurance of actual pedestrian and vehicular access.
25% increase in insurance coverage, so that insurance is 125% of amount stated in Schedule A.
10% increase in insurance coverage, if Company attempts pursuant to the policy to establish title and is unsuccessful.
Covered Risks as to Electronic Transactions, such as failure to comply with requirements to create documents electronically and failure to properly record a document electronically.
Coverage that real estate taxes and assessments are not due and payable, but unpaid.
Coverage against survey matters, because of: "Any encroachment, encumbrance, violation, variation, or adverse circumstance affecting the Title that would be disclosed by an accurate and complete land survey of the Land. The term "encroachment" includes encroachments of existing improvements located on the Land onto adjoining land, and encroachments onto the Land of existing improvements located on adjoining land."
Covered Risks insuring against notices of governmental enforcement, notices of legal violation and notices of eminent domain proceedings that are recorded in the Public Records.
Creditors' rights coverage because of prior fraudulent transfers, preferential transfers, and ineffective or delayed recording.
Gap coverage between the date of settlement (Date of Policy) and date of recording.
Coverage against the lack of priority of the lien of the Insured Mortgage over the lien of any assessments for street improvements under construction or completed at Date of Policy. This is the same as ALTA Endorsement 1.
The definition of "Indebtedness" is broadened, and includes future advances (as to which there is separate insurance of priority).
There is no non-cumulative liability clause in the Policy.27. There is no pro tanto reduction clause by payment of principal, and therefore no need for a Last Dollar Endorsement.
The Arbitration paragraph has a notation "Not Valid in the State of Louisiana".
Underwriting Requirements:
This Policy can only be issued in connection with one-to-four family residential property or an individual condominium unit. Issue only if improved property; Verify by review of tax/assessment search; Add address for land in Schedule A.
The Original Rate applicable for the Expanded Coverage Residential Loan Policy, issued in either standard or short form, shall be calculated at 110% of the premium under LATISSO Rule PR-2 (Loan Policy), plus the premium for any endorsement(s) added separately or incorporated in the policy at the applicable rate for such endorsement(s).
Issue on first liens only.
Issue only if lender is institutional lender commonly making residential loans (do not issue if lender is an individual).
Do not issue if loan is for construction or repair of improvements (must verify that all bills paid on any prior construction within lien period).
Issue only on (i) platted lot or metes and bounds tract not exceeding 25 acres; or (ii) condominium unit. Do not issue on metes and bounds or other property without underwriter approval or unless you can determine that the metes and bounds description does not violate subdivision map requirements.
Verify by tax/assessment search that separately assessed.
Verify with homeowner's association that assessments 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);
If a map of the land is attached (not required on policy), verify that description same as Schedule A description.
Sellers must execute the ALTA Homeowner's Policy of Title Insurance/Expanded Coverage Loan Policy Affidavit. If no sale, require borrowers to execute ALTA Homeowner's Policy of Title Insurance/Expanded Coverage Loan Policy Affidavit.
No inspection or survey is required.
Verify homeowner's assessment liens subordinated to insured mortgage (e.g. as purchase money or first lien). If condominium or uniform act provides that the Insured Mortgage is subordinate to some assessments, a specific exception in Schedule B is required. If the assessment lien of a covenant is not subordinate, specifically state in Schedule B. The specific exception may state "Notwithstanding the Covered Risks and Endorsements incorporated in this policy, the policy does not insure against lack of priority of the lien of the Insured Mortgage over any lien for assessments and charges set forth in (describe assessment lien provision)."
Separately and specifically except to easements, assessment liens and options or first refusals set forth in covenants.
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. Show the settlement date as the Date of Policy; you do not need to show recording information.
You should be satisfied that taxes and assessments are not yet due and payable, or add the following at the end of your tax exception:"These taxes and assessments are due and payable."You may continue to note in Schedule B that excepted taxes are not yet due and payable, if requested by the Insured.(14) You should except to a recorded notice of governmental violation (such as zoning, subdivision, environmental) or notice of eminent domain proceeding filed by any person. Do not remove as an exception because of a release unless you receive approval from underwriting personnel.
You may show as your Date of Policy the date of disbursement and delivery of all documents. You do not need to await recording information unless the closing instructions require that information on the Policy.
You should verify street improvements are not under construction or recently completed, by your tax search, survey review, or affidavit of the owner.