T-33 Guideline - Variable Rate Mortgage

Explanation:

This endorsement insures against invalidity, unenforceability or loss of priority of the lien of the insured mortgage by reason of provisions for changes in the rate of interest. The endorsement does not increase the face amount of the Policy. Each endorsement excludes usury and consumer credit protection.

Endorsement T-33 is issued with a T-2 Loan Policy.  The endorsement does not have to be issued simultaneously with the T-2 Loan policy to which it is attached.  

Please also see P-9b(6) and R-11d as applicable to endorsement T-33.

Underwriting Requirements:

(1)        On residential transactions, the endorsement may be issued endorsing the Loan Policy so long as the mortgage or mortgage rider refers to the variable rate features of the interest rate and, where applicable, to the negative amortization provisions. 

(2)         The interest rate should be determined by an objective formula not within the control of the lender (e.g., its own "prime rate").

(3)        If negative amortization is provided, we generally require that the mortgage state the maximum amount of amortization possible.

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