Bulletin: NM000010

Dear Associates:

The Superintendent of Insurance adopted new rates, forms and rules effectiveJuly 1, 2004.

New Rates

The variable portion of the rates was reduced 2%.  Flat fees (such as endorsements and simultaneous issue rates) were not changed. 

The new rate schedule (for original Owner's Policies) is attached as Exhibit 1.

The range of underwriter/agent division of premium was not changed.

ALTA Short Form Loan Policy (Modified) (NM 63) (NMAC 13.14.18.76)

Guidelines for the Short Form Residential Loan Policy (NM 63) are attached as Exhibit 2. 

The policy is substantially the same as the ALTA Short Form Loan Policy (2000) and is acceptable to Fannie Mae, Freddie Mac, and Ginnie Mae.  Minor changes were made to refer to New Mexico Endorsements and to add water rights (paragraph 7) and arbitration (paragraph 6) exceptions in Schedule B.

You should issue the Short Form Loan Policy on One to Four Family Residential Property, if the lender instructions request or allow the policy.  You should issue the Short Form Loan Policy (NM 63) only on a fee, not on a leasehold interest. We place no acreage limits for land that is "One to Four Family Residential Property."

Use of the Short Form Loan Policy (NM 63) will reduce errors. That means you will spend less time correcting policies after closing. Be aware of some of the common errors that still may occur if you use the Short Form Loan Policy (NM 63): (1) amount of insurance less than loan amount; (2) mortgage amount incorrect; (3) insured's name incomplete or incorrect; and, (4) borrower's name does not match mortgage.

The Short Form Loan Policy (NM 63) reduces time and expenses for both you and the lender in preparation and review. We recommend you market it to your lenders: many will want it once they understand it.  Lenders commonly requesting or allowing issuance of the Short Form Loan Policy in other states include ABN AMRO, Bank of America, Chase, Countrywide, First Horizon, First Union, Homeside Lending, Principal Residential Mortgage, Travelers, Wachovia, Washington Mutual, Wells Fargo, and World Savings.

The premium for this policy is the same as the rate for the Loan Policy (NM 2). The charges for deletion/amendment of standard exceptions and for endorsements incorporated by box reference also are the same as the charges for coverage to the Loan Policy (NM 2).

Foundation Endorsement (NM 61) (NMAC 13.14.18.74)

Guidelines for the Foundation Endorsement (NM 61) are attached as Exhibit 3. 

The Foundation Endorsement (NM 61) insures that a foundation (1) is within the boundary lines of the land, (2) does not violate covenants, conditions and restrictions (such as setback lines) because of its location, and (3) does not encroach into easements.   If encroachments into setback lines or easements are shown on the survey, they may be accepted in the endorsement.  NMAC 13.14.8.24.  The premium for the endorsement is (1) $25 for one-to-four family residential policies, and (2) $50 for commercial policies.  NMAC 13.14.10.44.

The Foundation Endorsement (NM 61) may be issued to on a Loan Policy or Construction Loan Policy. It may not be issued on an Owner's Policy. 

Assignment of Rents/Leases Endorsement (NM 62) (NMAC 13.14.18.75)

Guidelines for the Assignment of Rents/Leases Endorsement (NM 62) are attached as Exhibit 4. 

The Assignment of Rents/Leases Endorsement (NM 62) insures that the Assignment of Rents/Leases was properly executed, and that no prior assignment of the lessor's (landlord's) interest in rents or leases appears in the public records unless excepted in Schedule B.  The premium for the endorsement is $100.   NMAC 13.14.10.45.

The Assignment of Rents/Leases Endorsement (NM 62) may be issued with a Loan Policy or Leasehold Loan Policy (Loan Policy with Leasehold Endorsement attached).  It may not be issued on an Owner's Policy.  The endorsement may not be issued with residential property containing four or fewer dwelling units.  NMAC 13.14.8.25.

Deletion of Item 8 of Schedule B (NMAC 13.14.7.25)

Standard Exception 8 is "Taxes or assessments which are not shown as existing liens by the public records."  This exception may be deleted from the Loan Policy, Leasehold Loan Policy, or Construction Loan Policy, if (1) you perform a tax search and (2) all taxes and assessments will be paid. NMAC 13.14.7.25.   Standard Exception 8 may not be deleted from owner's policies.  The premium for deletion of this Standard Exception is $25.

Amended NM Form 35 Notice to Proposed Insured (NMAC 13.14.18.48)

The Superintendent amended NM Form 35 Notice to Proposed Insured to disclose that the charge for deleting certain exceptions is $25, instead of $32.  The revised form is attached as Exhibit 5.

Rate for Manufactured Housing Endorsement (NMAC 13.14.10.13)

The rate for the Manufactured Housing Endorsement (NM 16) is increased from $25 to $50.  NMAC 13.14.10.13.

Rate for Foreclosure Guarantee Policy and Subsequent Owner's Policy (NMAC 13.14.9.28)

The Superintendent reduced the rate for the Foreclosure Guarantee Policy (NM 41) from 80% of the full basic rate to 55% of the full basic rate.  If an Owner's Policy is issued following foreclosure, the Owner's Policy may be issued for 55% of the full basic rate.  If litigation is terminated by reinstatement of the lien, and a new Owner's Policy is issued to a buyer within one year after issuance of the Foreclosure Guarantee Policy (NM 41), 50% of the premium paid for the Foreclosure Guarantee Policy (NM 41) shall be credited to the new Owner's Policy premium.  NMAC 13.14.9.28.