Bulletin: TX000071

Dear Associates:

The Commissioner adopted new Forms and Rules effective April 1, 2004. Those forms for which new rates are required will not be effective until Rate Rules are adopted.

Amended Texas Short Form Residential Mortgagee Policy One-to-Four Family (T-2R) (Exhibit 1)

This Policy has been amended in minor respects. Changes include the following in revised Schedule A: (1) Check off Box for Taxes Not Yet Due and Payable; (3) Check off Box for Endorsement T-39 (Balloon Mortgage), and (3) Blank lines to delete subparagraphs of Endorsements T-17 (PUD) or T-19 (REM)

We encourage you to issue the Short Form Policy. It is now adopted in all states and is accepted by Fannie Mae, Freddie Mac, and Ginnie Mae. Use is encouraged by many lenders in closing instructions. Use of the Short Form speeds delivery, reduces errors and post-closing corrections, and reduces review time. More than 30% of all Loan Policies issued nationwide are Short Form Policies.

Tax Deletion Endorsement (T-30)

This Endorsement has been amended to be consistent with the Roll-back tax language in the Mortgagee Policy. You will generally continue to cover the Mortgagee by deleting the Roll-back language in Schedule B.

Access Endorsement (T-23) - Procedural Rule P-54 (Exhibit 2)

This new Endorsement insures specific actual access by a single, named Street to land. This new Endorsement may be issued on Mortgagee or Owner Policies if the land is improved and is not residential real property. The Endorsement may not be issued until Rate Rule R-30 is adopted.

Restrictions, Encroachments, Minerals Endorsement - Owner Policy (T-19.1) - Procedural Rule P-50.C (Exhibit 3)

This new Endorsement insures against Restriction violations, and certain damage resulting from enforcement of Easements and Minerals. This new Endorsement may be issued on Owner Policies if the land is not residential real property, and is similar to Endorsement T-19 to the Mortgagee Policy. You may use the Checklist provided by Richard Black. This Endorsement may not be issued until Rate Rule R-29.C is adopted.

Non-Imputation Endorsement (T-24) - Procedural Rule P-55 (Exhibit 4)

This new Endorsement insures against matters that were known or created by prior investors or owners of the titleholder, if they are not excepted in Schedule B of the Owner Policy. This new Endorsement may be issued on concurrently issued Owner Policies if the land is not residential real property. This Endorsement may not be issued until Rate Rule R-31 is adopted.

Contiguity Endorsement (T-25) - Procedural Rule P-56 (Exhibit 5)

This new Endorsement insures that two or more insured tracts are "contiguous" (adjacent, touching). This new Endorsement may be issued on a concurrently issued Owner or Mortgagee Policies if the land is not residential real property. This Endorsement may not be issued until Rate Rule R-32 is adopted.

Additional Insured Endorsement (T-26) - Procedural Rule P-57 (Exhibit 6)

This new Endorsement is issued after the Date of Policy and adds an additional insured to the Owner Policy by the Endorsement. The additional insured may be (1) a trustee or successor trustee of a Living Trust to whom the insured transfers title, or the beneficiaries of the Living Trust, (2) a partner, member or stockholder that acquires interests of the other owners of the insured pursuant to an agreement in effect at Date of Policy, or (3) a family partnership or corporation composed of the insured and family members. This new Endorsement may be issued Owner Policies covering residential real property, farmland, commercial land or any other type of land. This Endorsement may not be issued until Rate Rule R-33 is adopted.

Survey Affidavit (T-47) (Exhibit 7)

The Residential Real Property Affidavit has been amended to (1) allow the Affiant to disclose any changes in improvements, encroachments or other matters since a stated date, and (2) delete the former requirement that "evidence of the existing real property survey" be "attached to this Affidavit." On all residential Mortgagee Policies (including Short Forms) and on commercial Mortgagee Policies up to $10 million you may rely upon this Affidavit to provide area and boundary coverage (1) without requiring a copy for your file or for the Affidavit of the evidence of existing real property survey, and (2) even if the Affidavit discloses new improvements. The Affidavit should show a date that is the date from which the Affiant is familiar with the land, and does not need to be dated from the date of prior evidence of survey. The Affiant can be any knowledgeable person, whether or not the Owner.

Report on Directly Issued Policies - Procedural Rule P-58

New Procedural Rule P-58 requires the title insurer to submit an annual report of directly issued policies. You do not have to do anything with respect to this report.

Minimum Standards, Specific Instructions, and Report Forms for Audits

New Guidelines provide that "Charges for general overhead expenses such as in-house labor, utilities, taxes, business supplies and equipment are prohibited. If actual charges for products or services provided by third party vendors are known at or prior to closing, the charges may not be marked up. If actual charges for such products or services are not known by the time of closing, only reasonable estimates of such charges should be shown on closing statements and charged." Escrow accounts may be in branches of financial institutions located within the geographic bounds of Texas. An escrow agent that detects a defalcation of its trust funds must file a notice with the Title Examinations Section of TDI within 45 days after the end of the month in which the defalcation is believed to have occurred.

Continuing Education - Procedural Rule P-28

Education requirements are increased for licensees renewing on or after July 1, 2004:

License Period (in Months) Required Hours

Courses may include audio, video and computer-based instruction, remote classroom training, and teleconferences. Stewart Title continues to provide various education settings, including seminars, video instruction and audio seminars that comply with these requirements and that can fully satisfy TDI requirements for continuing education. Please call our district or state management personnel for assistance at any time.

Immediately Available Funds Procedure Agreement (T-37) (Exhibit 8)

This Agreement was changed to conform to Revised Article 9 of the Uniform Commercial Code. This amendment does not affect existing Agreements.

Rebates and Discounts - Procedural Rule P-53

This Procedural Rule is discussed by separate bulletin.