Bulletin: NY000154

Dear Associates:

This is the third in a series of three bulletins intended to explain recent changes to the TIRSA Rate Manual approved by the New York State Department of Insurance which became effective on October 31, 1997. A Residential Junior Loan Policy and a Short Form Junior Loan Policy together with two endorsements to be used in conjunction with these policies, are now available in our state. These policies are to be used in connection with subordinate or junior mortgages only, not for first mortgage transactions. The coverage involved is limited in scope. It insures against loss or damage sustained by reason of:

(1) The Grantee not being the named grantee in the last document recorded in the public records purporting to vest fee title to the property described in the policy;

(2) any monetary lien (which includes mortgages, judgments or any other lien securing the obligation to pay money) affecting title and recorded in the public records;

(3) any real estate taxes, assessments, water and sewer rent charges which constitute a lien on the property and which appear in the tax records on the date of policy.

The policy does not insure that the mortgagor is the owner of the property, nor does it insure the validity, enforceability or effectiveness of the mortgage which is the subject of the policy. It is, in effect, a guaranteed attorney search, which is limited to providing the name of the grantee on the last deed of record, monetary liens filed in the public records and real estate taxes, water and sewer rents and assessments which are a lien as of the date of policy. There is also a short form version of the Junior Loan Policy available which incorporates all of the provisions of the regular Junior Loan Policy. The cost of the Junior Loan Policy will be $200 for insurance up to $100,000 and $225 for insurance from $100,000 to $150,000. The maximum amount of insurance that can be written on the Junior Loan Policy is $150,000.

There are two (2) endorsements that can be obtained in connection with the Junior Loan Policy. The first is Junior Loan Policy Endorsement 1, which is really a continuation of the search run on the Junior Loan Policy. It will date-down the policy and show any document recorded in the public records subsequent to the date of the Junior Loan Policy which purports to vest fee title to the premises in question, as well as any additional monetary liens which have been filed or recorded in the public records since the date of the Junior Loan Policy. The cost of the date-down endorsement is $25.00. The second endorsement is for Revolving Credit or Variable Rate Junior Loans and will be attached to each policy without charge. Because, the charge for this new product is below the established minimum premium, it also will be monitored by the Department of Insurance to determine the appropriateness of the rate. The justification for the lower rate is the limited application and limited risk of the Junior Loan Policy.

This Company will be issuing underwriting guidelines with respect to the use of the Junior Loan Policy in the near future.

Should you have any questions, please do not hesitate to contact Company Counsel.