T-16 Guideline - Texas Loan Policy Aggregation Endorsement - Loan to T-2 Loan Policy

Explanation:

The Texas Loan Policy Aggregation Endorsement (T-16) is also known as a "tie-in," "cluster," or "spreader" endorsement. In multi-site loan transactions, mortgages securing the debt are frequently recorded in multiple jurisdictions or states, and it is impractical to issue a single Loan Policy for all the covered sites. The value of each property encumbered by the mortgage may be less than the total amount of the secured debt. This Endorsement aggregates the Amounts of Insurance of each Loan Policy listed in the Endorsement into one Aggregate Amount of Insurance for all Loan Policies listed, and creates the same result as a single Loan Policy covering multiple sites. In the event of a loss, this Endorsement permits the insured to take advantage of any increase in the value of a particular property.

This Endorsement is issued with a Loan Policy on commercial transactions. It is not designed to be issued with an Owner's Policy.

In some circumstances, the Aggregate Amount of Insurance for a particular state may be less than the Aggregate Amount of Insurance for the entire transaction. This may occur, for example, if the Company’s self-imposed or statutory limits for single risks in a particular state are less than the Aggregate Amount of Insurance for the entire transaction or if a particular state requires payment of mortgage recording tax on the nominal amount of debt secured.

T-16 Loan Policy Aggregation Endorsement may be used in situations where the Aggregate Amount of Insurance does not exceed the Company’s self-imposed or statutory limits for single risks in Texas.  The bracketed paragraph reading  [At no time shall the Amount of Insurance under this policy when aggregated with the other policies above exceed, in Texas, the amount shown as follows: $_____________.] shall be used in situations where the Company's statutory limits for single risks in Texas limit the Aggregate Amount of Insurance.

Underwriting Requirements:

1. A Stewart Title Guaranty Company underwriter must approve issuance of this Endorsement.
2. Two or more Loan Policies must be issued by the Company or by Stewart and another title insurance company.
3. The stated amount of the mortgage or deed of trust that is recorded in each state must equal the Aggregate Amount of Insurance stated in the Aggregation Endorsement; i.e., each mortgage, on its own, must be capable of securing the full amount of the secured debt.
4. This Endorsement contemplates that Schedule A of each Loan Policy will state an allocated state-specific Amount of Insurance for each specific property. In Section 1 of the Endorsement, insert a list of all aggregated Loan Policies and their state-specific allocated amounts. This list can include the state-specific allocation for the subject property as well. In Section 3 of the Endorsement, insert the Aggregate Amount of Insurance for all Loan Policies (i.e., the total).
5. Stewart’s annual statutory limit must be included in the bracketed language quoted above.  Complete both Section 3.a (by inserting the Aggregate Amount of Insurance for all policies) and Section 3.b (by inserting the state-specific Aggregate Amount of Insurance applicable for a particular state or states). Contact the Reinsurance Department to ascertain current statutory or self-imposed single risk limits.
   
6. If the endorsement is being issued with coinsurance, then one of the following will apply:
   1.     Stewart Title Guaranty Company issues its own policy for the amount of its share of liability, in which event the aggregation endorsement should show the total of all policies issued by STGC.
   2.     One coinsurer issues the policy for each state and each additional coinsurer issues a T-48 in accordance with P-6.c., in which event the aggregate liability in the T-16 is the aggregate amount of liability assumed by STGC.

For further guidance, refer to the applicable subsections in Section 11.04 of the National Underwriting Manual on Virtual Underwriter http://www.vuwriter.com/vumanuals.jsp?displaykey=UM00000208