2006 ALTA Endorsements

Roger Therien

Regional Counsel – West Region

11/28/2006

Topics Covered

All endorsements will be listed (See

westregion.com)

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 – 9.4

9.1 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 (excludinglawn, 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.