2006 ALTA Endorsements Roger Therien Regional Counsel – West Region 11/28/2006

Topics Covered  All endorsements will be listed (See westregion.com) All endorsements will be listed (See westregion.com)  Certain ones will be discussed:  New Endorsements  Modified Endorsements  Confusing endorsements that deserve to be discussed

Regular v. “-06”  45 ALTA endorsements.  Includes as of 6/17/06: 8 new, 3 modified.  Parallel set of 45 endorsements designated “-06”.  The -06 endorsements match the 2006 policies.  Both sets of endorsements are substantively identical.  Additionally, the JR1 and JR2 endorsements are for the Limited Coverage Residential Loan Policy.

New and Modified Endorsements  7.1Manufactured Housing Unit–Conversion: Loan  7.2Manufactured Housing Unit–Conversion: Owner  9Restrictions, Encroachments & Minerals–LOAN  9.1Restrictions, Encroachments, Minerals–unimproved–OWNER  9.2Restrictions, Encroachments, Minerals–improved–OWNER  9.3Restrictions, Encroach., Minerals–LOAN–Future Imp–Mineral Extraction  9.4Restrictions, Encroach., Minerals–unimproved–OWNER–Future Imp–Mineral Extraction  9.5Restrictions, Encroach., Minerals–improved–OWNER–Future Imp–Mineral Extraction  14.3Future Advance – Reverse Mortgage  22Location  22.1Location and Map

1Street Assessments  Lien of assessments for street improvements under construction or completed at Date of Policy not excepted in Schedule B.  2006 Loan Policy:  11. The lack of priority of the lien of the Insured Mortgage upon the Title... (b) over the lien of any assessments for street improvements under construction or completed at Date of Policy.

2Truth in Lending  Any final judgment... that... the lien of the insured mortgage has been... defeated by a valid exercise of the right of rescission conferred by the Federal Truth in Lending Act...  Basically, guidelines allow issuance only when lender does not need it because TILA clearly does not apply (borrower is an entity or loan is for business purposes).

3Zoning – Unimproved Land  The Company insures the Insured against loss or damage sustained in the event that, at Date of Policy: 1.According to applicable zoning ordinances and amendments thereto, the land is not classified Zone __________. 2.The following use or uses are not allowed under that classification: _____________

3.1Zoning – Improved Land  Same as 3, plus:  Insurance against violations as to type of structures, land area, floor space, setbacks, height of structures, number of parking spaces.

4 and 4.1Condominium  Numerous coverages insuring that condo is validly created and in compliance with CC&R’s.  4: Insures against priority of any lien for charges and assessments over the lien of the insured mortgage.  4.1: Insures against priority of the lien for charges and assessments due and unpaid at Date of Policy.

4 and 4.1Condominium (Cont.)  Why the difference?  NV Revised Statutes : The [homeowner association’s] lien is also prior to [a first security interest on the unit recorded before the date on which the assessment became delinquent] to the extent of the assessments [that became due] during the 6 months immediately preceding institution of an action to enforce the lien.

4 and 4.1Condominium (Cont.)  HI Revised Statutes 514A-90 (g)... [A]n association... may specially assess the amount of the unpaid regular monthly common assessments... against a person who, in a judicial or nonjudicial... foreclosure, purchases a delinquent apartment...  (h) The amount of the special assessment assessed under subsection (g) shall not exceed the total amount of unpaid regular monthly common assessments that were assessed during the six months immediately preceding the completion of the... foreclosure. In no event shall the amount of the special assessment exceed the sum of $1,800.

4 and 4.1Condominium (Cont.)  So...  In HI and NV, do not issue the 4, which insures against the priority of any lien for assessments.  In those states, issue the 4.1, which only insures against the priority of assessments that are due and unpaid at Date of Policy.

5 and 5.1Planned Unit Devel.  Exact same language as in the 4 and 4.1.  So...  In HI and NV, do not issue the 5, which insures against the priority of any lien for assessments.  In those states, issue the 5.1, which only insures against the priority of assessments that are due and unpaid at Date of Policy.

6 SeriesVariable Rate  6: Variable Rate  6.1: Variable Rate, Regulation – NO LONGER USED.  6.2: Variable Rate, Negative Amortization  I think 6.1 was eliminated because it contained an unworkable exception: “The endorsement does not insure against loss or damage by reason of the failure of the insured to comply with the following statutes or regulations concerning variable rate mortgages: __”  All have an exception for usury, consumer credit protection and truth in lending laws.

7 SeriesManufactured Housing  7: Manufactured Housing Unit  “Land” includes manufactured housing unit  7.1: MHU – Conversion – Loan  7.2: MHU – Conversion – Owner The 7.1 and 7.2 provide the same coverage as the 7, plus enhanced coverages relating to conversion, including specific insurance that the MHU is real property.

8.1Environmental Lien  No change.

Revised Comprehensive Forms  The Comprehensive Forms ALTA Restrictions, Encroachments, and Mineral Endorsement  9 for Loan Enhanced version: 9.3  9.1 for Owner – Unimproved Enhanced version: 9.4  9.2 for Owner – Improved Enhanced version: 9.5 As used in paragraphs 1.a. and 5, the words “covenants, conditions or restrictions” do not include any covenants, conditions or restrictions [Delete: “relating to environmental protection.”] (a) relating to obligations of any type to perform maintenance, repair or remediation on the Land, or (b) pertaining to environmental protection of any kind or nature, including hazardous or toxic matters, conditions or substances, except to the extent that a notice of a violation or alleged violation affecting the Land has been recorded or filed in the Public Records at Date of Policy and is not excepted in Schedule B.

NEW Comprehensive Forms – v. 9.3 (Loan)  Coverage for damage from exercise of right of surface entry:  9: Damage to existing improvements...  9.3: Damage to improvements located on the Land on or after Date of Policy...  BOTH: including lawns, shrubbery, or trees

NEW Comprehensive Forms – v. 9.4 (Owner – Unimproved)  Coverage for damage from exercise of right of surface entry:  9.1: Damage to buildings... constructed after Date of Policy  9.4: Damage to improvements... constructed after Date of Policy (excluding lawn, shrubbery, or trees)

NEW Comprehensive Forms – v. 9.5 (Owner – Improved)  Coverage for damage from exercise of right of surface entry:  9.2: Damage to existing buildings...  9.5: Damage to improvements located on the Land on or after Date of Policy... (excluding lawns, shrubbery, or trees)

10 – 13  10: Assignment of Mortgage  10.1: Assignment of Mortgage (with priority coverage – date down)  11: Modification of Mortgage  12: Aggregation (Tie-In)  13: Leasehold – Owner  13.1: Leasehold – Loan

14 Series  14: Future Advance – Priority  14.1: Future Advance – Knowledge  14.2: Future Advance – Letter of Credit  14.3: Future Advance – Reverse Mortgage  Quite a bit of demand for this kind of endorsement

 15: Nonimputation – Full Equity Transfer  15.1: Nonimputation – Additional Insured  15.2: Nonimputation – Partial Equity Transfer  16: Mezzanine Financing  17: Access and Entry  17.1: Indirect Access and Entry

 18: Single Tax Parcel  18.1: Multiple Tax Parcel  19: Contiguity – Multiple Parcels  19.1 Contiguity – Single Parcel  20: First Loss – Multiple Parcel Transactions  21: Creditor’s Rights

22 Series  22: Location  Insures that an improvement with a specified address is located on the Land  22.1: Location and Map  22 coverage plus the attached map, if any, shows location and dimensions of land according to the Public Records.  Identical to CLTA 116

Short Form Lim. Cov. Jr. Loan Policy  JR1: Supplemental Coverage (Date Down)  JR2: Revolving Credit / Variable Rate  No “-06” versions because there is no 2006 version of this policy.