Guideline: ALTA Limited Pre-Foreclosure Policy (12-3-12)

Explanation:

This policy is designed to be used by a lender contemplating foreclosure, trustee’s sale or deed in lieu of foreclosure of an existing, previously recorded mortgage or deed of trust. 

This policy insures against loss or damage sustained by reason of any of the following being recorded in the Public Records subsequent to the recording of the Insured’s existing mortgage: (a) an instrument purporting to change or evidencing a change in the ownership of the Title; (b) an instrument purporting to create a right or interest affecting the Title; (c) a Mortgage, notice of Mechanic’s Lien, Judgment Lien, federal tax lien, or other lien affecting the Title; (d) a Notice of a Judicial Proceeding affecting the Title; (e) a Notice of Bankruptcy specified in 11 U.S.C. Section 549 (c); or (f) the exercise of rights of eminent domain against any part of the Land if a notice of the exercise is recorded in the Public Records subsequent to the recording of the Insured’s existing mortgage. 

This policy also insures against loss or damage sustained by reason of a Judgment Lien or federal tax lien affecting the Title and recorded in the Public Records against the name(s) of the mortgagor(s) shown on the Insured’s existing mortgage prior to the recording of the Insured’s existing mortgage. 

This policy also insures against loss or damage sustained by reason of ad valorem real estate taxes and assessments imposed by a governmental authority due and payable at Date of Policy.

Underwriting Requirements:

1. Perform your customary search of the Public Records subsequent to the recording of the Insured’s Mortgage. 

2. In addition, perform your customary search of the names of mortgagor(s) for judgment liens or federal tax liens prior to the recording of the Insured’s Mortgage. 

3. Perform your customary tax and assessment search of the Land. 

4. The Date of Policy should be the effective date of your search of the Public Records. 

5. Do not issue a commitment. Prior to issuing this policy, confirm with the customer (i.e., the representative of the prospective insured lender) that a commitment will not be issued. Also, prior to issuing the policy, confirm with the customer the amount of premium to be charged for this policy, and the expectation that the premium will be due upon issuance of this policy. 

6. You may issue this policy even if the existing mortgage was not insured by the Company (e.g., if the existing mortgage was insured by a different underwriter, or if the existing mortgage was not insured at all).