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Basic Manual of Title Insurance, Section IV (continued)

Title Manual Main Index | Section IV Index

Includes Procedural Rules P-44 | P-45 | P-46

P-44. Equity Loan Mortgage Endorsement (T-42)

  1. When a Mortgagee Policy of Title Insurance ( T-2) is to be issued insuring the lien securing an extension of credit made pursuant to Subsection (a)(6) of Section 50, Article XVI, Texas Constitution, the Company shall attach to the Mortgagee Policy of Title Insurance (T-2) the Equity Loan Mortgage Endorsement ( T-42).

  2. The Company may delete any provision of paragraph 2 of the Equity Loan Mortgagee Endorsement (T-42) if it does not consider the additional risk insurable.

  3. The Company may add subparagraph (f) to paragraph 2 of the Equity Loan Mortgage Endorsement (T-42) if it considers the risk insurable, provided that the following requirements are met:

    1. The promissory note secured by the insured mortgage and the insured mortgage must be executed by the borrower(s)/grantor(s) at the office of a title company and the insured mortgage must be acknowledged by the borrower(s)/grantor(s) at the office of a title company. For purposes of this subparagraph C(1), "the office of a title company" shall mean the leased or owned Texas office location(s) of: (a) a title insurance company; or, (b) a direct operation; or, (c) a title insurance agent; or, (d) an attorney conducting the attorney?s business in the name of a title insurance company or direct operation or title insurance agent where the attorney and the attorney?s bona fide employees who close transactions are licensed as escrow officers as provided in Article 9.42.C, Texas Insurance Code.

    2. Subparagraph (f) of paragraph 2 of the Equity Loan Mortgage Endorsement ( T-42) must read as follows:

      "(f) The extension of credit secured by the lien of the insured mortgage being closed at a location other than the office of the lender, an attorney at law, or a title company, as set forth in Subsection (a)(6)(N) of Section 50, Article XVI, Texas Constitution."
  4. The Company may not provide Express Insurance (pursuant to P-39) as to matters set forth in the Equity Loan Mortgage Endorsement (T-42).


Title Manual Main Index | Section IV Index

P-45. Texas Reverse Mortgage Endorsement (T-43)

  1. When a Mortgagee Policy of Title Insurance ( T-2) is to be issued insuring the lien securing a reverse mortgage loan made pursuant to Subsection (a)(7) of Section 50, Article XVI, Texas Constitution, the Company shall attach to the Mortgagee Policy of Title Insurance (T-2) the Texas Reverse Mortgage Endorsement ( T-43).

  2. The Company may not provide Express Insurance (pursuant to P-39) as to matters set forth in the Texas Reverse Mortgage Endorsement (T-43).

  3. The Loan Policy of Title Insurance (T-2) insuring the lien securing a reverse mortgage loan may be issued in an amount not exceeding:

    1. 150% of the total advances to be made according to a plan established by the original loan agreement; or

    2. The maximum amount that may be secured by the lien of the insured mortgage, as estimated by the lender according to the written lender instructions; or,

    3. In the case of an FHA-insured loan, the Maximum Claim Amount as established by FHA.

  4. The Company may delete any subdivision in Paragraph 3 of the Texas Reverse Mortgage Endorsement ( T-43) if it does not consider the additional risk insurable. The following language shall be placed below Paragraph 3:

    "Subdivision ________ of Paragraph 3 of this Texas Reverse Mortgage Endorsement (T-43) is hereby deleted. The Company does not insure against failure to comply with the Subsection of the Constitution referred to in said subdivision of Paragraph 3."

    The Company shall complete the blank with the appropriate subdivision of Paragraph 3 of the Texas Reverse Mortgage Endorsement ( T-43) if the above format is used.

  5. The Company must delete subdivisions (ii) through (iv) of Paragraph 3 of the Texas Reverse Mortgage Endorsement ( T-43) if the insured mortgage and the promissory note are not executed at the office of a title company. For purposes of this Rule P-45, "the office of a title company" shall mean the leased or owned Texas office location(s) of: (1) a title insurance company; or, (2) a direct operation; or, (3) a title insurance agent; or, (4) an attorney conducting the attorney's business in the name of a title insurance company or direct operation or title insurance agent where the attorney and the attorney's bona fide employees who close transactions are licensed as escrow officers as provided in Article 9.42.C, Texas Insurance Code. In order to evidence the deletion required by this Paragraph E, the following language shall be stated on the Texas Reverse Mortgage Endorsement (T-43):

    "Subdivisions (ii) through (iv) of Paragraph 3 of this Texas Reverse Mortgage Endorsement (T-43) are hereby deleted. The Company does not insure against the failure to comply with the Subsections of the Constitution referred to in said subdivisions of Paragraph 3."
  6. The Company must delete subdivision (ii) of Paragraph 3 of this Texas Reverse Mortgage Endorsement (T-43) as provided in Paragraph D, above, if the Company is not furnished with government issued photographic identification showing that the owner of the land or the spouse of the owner of the land is 62 years or older.

  7. The Company must delete subdivision (iii) of Paragraph 3 of this Texas Reverse Mortgage Endorsement ( T-43) as provided in Paragraph D, above, if the document furnished by the insured and purporting to attest or acknowledge that the owner received counseling regarding the advisability and availability of reverse mortgages and other financial alternatives in not executed by the owner of the land at an office of a title company on the date that the insured mortgage and the promissory note secured thereby are executed.

  8. The Company must delete subdivision (iv) of Paragraph 3 of this Texas Reverse Mortgage Endorsement (T-43) as provided in Paragraph D, above, if the document furnished by the insured and purporting to disclose to the owner of the land the provisions contained in Subsection (k)(6) of Section 50, Article XVI, Texas Constitution under which the payment of principal and interest secured by the insured mortgage may be required is not given to the owner of the land and receipt is not acknowledged in writing by the owner of the land at an office of a title company on the date that the insured mortgage and the promissory note secured thereby are executed.


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P-46. TEXAS RESIDENTIAL LIMITED COVERAGE JUNIOR MORTGAGEE POLICY (T-44) AND TEXAS RESIDENTIAL LIMITED COVERAGE JUNIOR MORTGAGEE POLICY DOWN DATE ENDORSEMENT (T-45) AND TEXAS RESIDENTIAL LIMITED COVERAGE JUNIOR MORTGAGE POLICY HOME EQUITY LINE OF CREDIT/VARIABLE RATE ENDORSEMENT (T-46) AND TEXAS RESIDENTIAL LIMITED COVERAGE JUNIOR MORTGAGEE POLICY ADDITIONAL COVERAGE ENDORSEMENT

  1. Texas Residential Limited Coverage Junior Mortgagee Policy (T-44)

    1. A Company may issue the Texas Residential Limited Coverage Junior Mortgagee Policy ( T-44) if:

      1. the land is encumbered by one or more mortgages recorded in the public records, and

      2. the land is residential property (as defined in this rule P-46.A.(4)), and

      3. the proposed insured is an entity which is an institutional lender (such as a bank, savings and loan association, savings bank, or credit union), and

      4. the proposed insured intends to secure a junior mortgage (the insured's mortgage) on the land that secures an extension of credit pursuant to Subsection (a)(6), of Section 50, Article XVI, Texas Constitution, and

      5. the extension of credit to be secured by the insured's mortgage will not exceed $100,000.

    2. The Amount of Insurance of the Texas Residential Limited Coverage Junior Mortgagee Policy (T-44) shall be the estimated amount of the extension of credit to be secured by the insured?s mortgage.

    3. The Company shall not delete the arbitration provisions of the Texas Residential Limited Coverage Junior Mortgagee Policy.

    4. For purposes of this Rule P-46, "residential property" is real property which has improvements designed principally for the occupancy of from one to four families (including individual units of condominiums and cooperatives) that (1) is located in a platted subdivision of record, or (2) consists of five acres or less.

  2. Texas Residential Limited Coverage Junior Mortgagee Policy Additional Coverage Endorsement

    1. A Company may issue a Texas Residential Limited Coverage Junior Mortgagee Policy Additional Coverage Endorsement to the Texas Residential Limited Coverage Junior Mortgagee Policy ( T-44) by inserting the following provisions in Endorsement Form T-3 on issuance of the Texas Residential Limited Coverage Junior Mortgagee Policy (T-44), if the Company considers the risk insurable:

      1. The following Insuring Provision is substituted for Insuring Provision number 4 of the Texas Residential Limited Coverage Junior Mortgagee Policy (T-44):

        "4. Any other Monetary Lien affecting the title, recorded in the public records."
      2. The following is added to the Texas Residential Limited Coverage Junior Mortgagee Policy Combined Schedule:

        "Tax Designation of Land:
        [ ] is designated for agricultural use as provided by statutes governing property tax.
        [ ] is not designated for agricultural use as provided by statutes governing property tax."
      3. The following Insuring Provisions are added to the Texas Residential Limited Coverage Junior Mortgagee Policy:

        "5. At Date of Policy, the Tax Designation of Land shown on the Combined Schedule to this policy being incorrect."

        "6. Any lien for standby fees, taxes or assessments of any taxing authority that are due and payable at Date of Policy."
      4. The following exception is substituted for Exception A of the exceptions of the Texas Residential Limited Coverage Junior Mortgagee Policy Combined Schedule:

        "A. Standby fees, taxes or assessments by any taxing authority for the year 20 __ and subsequent years, and subsequent taxes and assessments by any taxing authority for prior years.
    2. A Company may incorporate or add the provisions of the Texas Residential Limited Coverage Junior Mortgagee Policy Additional Coverage Endorsement to the Texas Residential Limited Coverage Junior Mortgagee Policy (T-44) if such coverage is requested prior to the issuance of the Texas Residential Limited Coverage Junior Mortgagee Policy ( T-44).

  3. Texas Residential Limited Coverage Junior Mortgagee Policy Down Date Endorsement (T-45)

    1. A Company may issue one or more Texas Residential Limited Coverage Junior Mortgagee Policy Down Date Endorsements ( T-45) within one year after issuance by that Company of the Texas Residential Limited Coverage Junior Mortgagee Policy ( T-44). A Company may not issue a Texas Residential Limited Coverage Junior Mortgagee Policy Down Date Endorsement (T-45) more than one year after issuance of the Texas Residential Limited Coverage Junior Mortgagee Policy (T-44).

    2. A company may delete Paragraph B from the Texas Residential Limited Coverage Junior Mortgagee Policy Down Date Endorsement (T-45) if that paragraph is not applicable at the time of the issuance of the Endorsement.

    3. If the amount of the extension of credit secured by the insured's mortgage exceeds the amount of insurance previously stated in the Texas Residential Limited Coverage Junior Mortgagee Policy (T-44), the amount of insurance shall be increased by noting that change as a Paragraph D in the Texas Residential Limited Coverage Junior Mortgagee Policy Down Date Endorsement (T-45), subject to payment of the applicable premium as provided in Rule R-27. The Paragraph D shall read as follows: "D. The amount of insurance of the Policy is hereby amended to be $_______."

  4. Texas Residential Limited Coverage Junior Mortgagee Policy Home Equity Line of Credit/Variable Rate Endorsement (T-46)

    1. A Company may issue one Texas Residential Limited Coverage Junior Mortgagee Policy Home Equity Line of Credit/Variable Rate Endorsement ( T-46) within one year after issuance by that Company of the Texas Residential Limited Coverage Junior Mortgagee Policy ( T-44). A Company may not issue a Texas Residential Limited Coverage Junior Mortgagee Policy Home Equity Line of Credit/Variable Rate Endorsement (T-46) more than one year after issuance of the Texas Residential Limited Coverage Junior Mortgagee Policy (T-44).

    2. The Texas Residential Limited Coverage Junior Mortgagee Policy Home Equity Line of Credit/Variable Rate Endorsement (T-46) shall not be issued unless the insured's mortgage described on the Texas Residential Limited Coverage Junior Mortgagee Policy Down Date Endorsement ( T-45) secures a variable rate loan or home equity line of credit. For purposes of this rule, a variable rate loan is a loan made pursuant to Subsection (a)(6), of Section 50, Article XVI, Texas Constitution which permits adjustments of the interest rate, with such adjustments being implemented through changes in the payment amount and/or as otherwise allowed by applicable law. For purposes of this rule, a home equity line of credit is an open-end account made pursuant to Subsections (a)(6) and (t), of Section 50, Article XVI, Texas Constitution.

  5. Procedures Applicable to Texas Residential Limited Coverage Junior Mortgagee Policy (T-44) and Texas Residential Limited Coverage Junior Mortgagee Policy Down Date Endorsement (T-45) and Texas Residential Limited Coverage Junior Mortgagee Policy Home Equity Line of Credit/Variable Rate Endorsement (T-46) and Texas Residential Limited Coverage Junior Mortgagee Policy Additional Coverage Endorsement

    1. A Company may not issue a Commitment for Title Insurance prior to or in connection with the issuance of the Texas Residential Limited Coverage Junior Mortgagee Policy ( T-44) or Texas Residential Limited Coverage Junior Mortgagee Policy Down Date Endorsement ( T-45) or Texas Residential Limited Coverage Junior Mortgagee Policy Home Equity Line of Credit/Variable Rate Endorsement ( T-46) or Texas Residential Limited Coverage Junior Mortgagee Policy Additional Coverage Endorsement.

    2. No proforma or specimen Texas Residential Limited Coverage Junior Mortgagee Policy (T-44) Combined Schedule or Texas Residential Limited Coverage Junior Mortgagee Policy Down Date Endorsement (T-45) or Texas Residential Limited Coverage Junior Mortgagee Policy Home Equity Line of Credit/Variable Rate Endorsement (T-46) or Texas Residential Limited Coverage Junior Mortgagee Policy Additional Coverage Endorsement may be issued.

    3. A T-3 Correction Endorsement may be issued to delete errors or erroneous exceptions contained in Paragraph 2 of the Texas Residential Limited Coverage Junior Mortgagee Policy (T-44) Combined Schedule or Paragraph A of the Texas Residential Limited Coverage Junior Mortgagee Policy Down Date Endorsement (T-45). The requirements of Section 2, Paragraph IV, of the Basic Manual, entitled "Correction of Policy or Binder" shall apply to a Correction Endorsement for a Texas Residential Limited Coverage Junior Mortgagee Policy (T-44) Combined Schedule or Texas Residential Limited Coverage Junior Mortgagee Policy Down Date Endorsement (T-45) or Texas Residential Limited Coverage Junior Mortgagee Policy Home Equity Line of Credit/Variable Rate Endorsement (T-46) or Texas Residential Limited Coverage Junior Mortgagee Policy Additional Coverage Endorsement.

    4. The Company may not provide Express Insurance (pursuant to P-39), or coverage or endorsements applicable to a Mortgagee Title Policy of Title Insurance ( T-2) or Interim binder ( T-13).

    5. The agent portion of the premium for the Texas Residential Limited Coverage Junior Mortgagee Policy ( T-44) or Texas Residential Limited Coverage Junior Mortgagee Policy Down Date Endorsement ( T-45) or Texas Residential Limited Coverage Junior Mortgagee Policy Home Equity Line of Credit/Variable Rate Endorsement ( T-46) or Texas Residential Limited Coverage Junior Mortgagee Policy Additional Coverage Endorsement shall be retained by and paid to only the title insurance agent in the county where the land described in the policy or Endorsements is located if such title insurance agent performs either the: (i) title search; (ii) title examination; or (iii) issuance of the policy or Endorsements.

Continue to P-47. Supplemental Coverage Equity Loan Mortgage Endorsement

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Last updated: 11/03/2015

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