Virtual Underwriter

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Bulletin: TX000057

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Bulletin: TX000057

Bulletin Document
V 1
Date: March 27, 2001
To: All Issuing Offices In Texas
RE: Residential Refinances

Dear Associates:

With the increase in refinances and recent developments in financing, we want to review with you some basic ideas to keep in mind when issuing Mortgagee Policies:

PRIOR HOME EQUITY MORTGAGE WITHIN LAST YEAR

If you are insuring a new Home Equity Loan, and the current owner executed a home equity mortgage on the same homestead less than one year ago, you cannot close on the new home equity loan. The law prohibits home equity closings within one year from the prior home equity closing, even if the prior home equity mortgage has been released. Please also see our bulletins TX000040, TX000043 and TX000049 concerning home equity loans.

REFINANCING THAT INCLUDES PAYOFF OF HOME EQUITY MORTGAGE

If a refinance includes a payoff of a home equity mortgage, the new mortgage must be a home equity mortgage and you must follow the instructions for insurance of a home equity mortgage. Accordingly, review our guidelines for issuance of the T-42 Endorsement and the T-42.1 Endorsement, if applicable. It does not matter whether the refinance also pays off a purchase money or construction loan. If any payoff is made on a prior home equity loan, the new loan must be a home equity loan. It also does not matter whether the new loan includes any additional cash to the borrower. If it pays off a home equity loan, the new loan is a home equity loan. Please also see our bulletins TX000040, TX000043, and TX000049 concerning home equity loans.

PAYOFF OF HOME EQUITY MORTGAGE WITH REVERSE MORTGAGE

If you are closing a reverse mortgage loan and any proceeds are used to payoff a home equity loan, you cannot close or issue without express underwriting approval. This may be considered a home equity loan. Please also see our bulletins TX000039 and TX000056 concerning reverse mortgages.

REFINANCING CLOSING COSTS

We have previously authorized refinancing to include closing costs, such as prepaids (impounds, trust or escrow accounts for taxes and insurance), so long as the financed closing costs do not exceed 10% of the new loan. Please see our bulletin TX000048 for more specific instructions. If you are asked to provide additional coverage or express insurance, please call our underwriting personnel.

OVERBURDENING AND SPREADING

You may insure refinances of valid liens on homestead where the new mortgage covers only a part of the homestead previously mortgaged (this used to cause "overburdening" of homestead). You should verify that the new mortgage includes the home. You also may insure refinances of valid liens on homestead where the new mortgage covers additional homestead land, so long as one of the prior liens covered the home (this used to be improper "spreading" of a homestead lien). Please call our underwriters if you are asked to insure other transactions. Also please see our bulletin TX000051.

THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

References