Basic Manual of Title Insurance, Section IV (continued)

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Includes Procedural Rule P-47 | P-48

P-47 SUPPLEMENTAL COVERAGE EQUITY LOAN MORTGAGE ENDORSEMENT (T-42.1)

General Requirements

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 may attach the Mortgagee Policy of Title Insurance (T-2) and the Supplemental Coverage Equity Loan Mortgage Endorsement ( T-42.1) if the Company considers the risk insurable and the Company complies with this Procedural Rule P-47. The general requirements and limitations for issuance of the Supplemental Coverage Equity Loan Mortgage Endorsement (T-42.1) are as follows:
1. The Company shall not attach the Supplemental Coverage Equity Loan Mortgage Endorsement (T-42.1) to the Mortgagee Policy of Title Insurance ( T-2) unless:
  1. The Equity Loan Mortgage Endorsement ( T-42) is attached to said Mortgagee Policy of Title Insurance; and
  2. The Company has complied with the provisions of Procedural Rule P-44 concerning the attachment of the Equity Loan Mortgage Endorsement (T-42) to the Mortgagee Policy of Title Insurance ( T-2).
2. The Company may delete any provision of paragraph 1 of the Supplemental Coverage Equity Loan Mortgage Endorsement (T-42.1) if it does not consider the additional risk insurable. The following language may be placed along side each lettered sub-paragraph reference contained in paragraph 1 of the Supplemental Coverage Equity Loan Mortgage Endorsement ( T-42.1) which the Company determines to delete:
  
  "Item ______________ of paragraph 1 of this Supplemental Coverage Equity Loan Mortgage Endorsement (T-42.1) is hereby deleted."
  
  The Company shall complete the blank with the appropriate sub-paragraph letter of paragraph 1 of the Supplemental Coverage Equity Loan Mortgage Endorsement (T-42.1) if the above format is utilized.
3. The Company shall not provide Express Insurance (pursuant to P-39) as to matters set forth in the Supplemental Coverage Equity Loan Mortgage Endorsement (T-42.1), whether or not the Company issues T-42.1.
4. The Company must delete subparagraphs (a) through (h) and subparagraph (l) of paragraph 1 of the Supplemental Coverage Equity Loan Mortgage Endorsement (T-42.1) if:
  1. the insured mortgage and the promissory note secured thereby are not executed at the office of a title company in accordance with Procedural Rule P-44(c)(1); or,
  2. the Company deletes subparagraph 2(f) of the Equity Loan Mortgage Endorsement ( T-42).
  In order to evidence the deletion required by this subsection of P-47.A.(4), the following language may be stated on the Supplemental Coverage Equity Loan Mortgage Endorsement ( T-42.1) in place of sub-paragraphs (a) through (h) and sub-paragraph (l) of paragraph 1 of the Supplemental Coverage Equity Loan Mortgage Endorsement (T-42.1). The following language may be used:
  
  "Sub-paragraphs (a) through (h) and sub-paragraph (l) of paragraph 1 of the Supplemental Coverage Equity Loan Mortgage Endorsement (T-42.1) are hereby deleted in their entirety."
SPECIFIC ENDORSEMENT PARAGRAPH REQUIREMENTS

The requirements and limitations applicable for each numbered insuring provision of Supplemental Coverage Equity Loan Mortgage Endorsement ( T-42.1) are set forth in items 1 through 12 below:
1. Signature Before Specified Date
  
  The Company must delete subparagraph (a) of paragraph 1 of Supplemental Coverage Equity Loan Mortgage Endorsement (T-42.1) if:
  1. written instructions are not furnished by the insured to the Company or its Title Insurance Agent prior to the execution of the insured mortgage and the promissory note secured thereby;
  2. the written instructions do not state a specific calendar date that constitutes the earliest date for execution of the insured mortgage and the promissory note secured thereby.
2. Loan Proceeds Disbursement Before Fourth Day
  
  The Company must delete subparagraph (b) of paragraph 1 of the Supplemental Coverage Equity Loan Mortgage Endorsement ( T-42.1) if:
  1. the Company or its Title Insurance Agent does not disburse all loan proceeds received by the Company or its Title Insurance Agent; or
  2. any of the loan proceeds received by the Company or its Title Insurance Agent are disbursed sooner than four calendar days after the insured mortgage and promissory note are executed.
3. Execution of Election Not to Rescind
  
  The Company must delete subparagraph (c) of paragraph 1 of the Supplemental Coverage Equity Loan Mortgage Endorsement ( T-42.1) if a document purporting to evidence an election not to rescind the extension of credit secured by the lien of the insured mortgage is executed in the presence of an escrow officer at an office of the Company or its Title Insurance Agent on or before the date that the insured mortgage and the promissory note secured thereby are executed.
4. Document Copies
  
  The Company must delete subparagraph (d) of paragraph 1 of the Supplemental Coverage Equity Loan Mortgage Endorsement ( T-42.1) if the Company or its Title Insurance Agent do not provide each owner of the land with a copy of all documents related to the extension of credit secured by the lien of the insured mortgage that were executed by the owner at an office of the Company or its Title Insurance Agency on the date that the owner executed the insured mortgage and the promissory note secured thereby.
5. Fees
  
  The Company must delete subparagraph (e) of paragraph 1 of the Supplemental Coverage Equity Loan Mortgage Endorsement ( T-42.1) if:
  1. any fees are collected or disbursed by the Company or its Title Insurance Agent and said fees are not shown on the final settlement statement which was prepared by the Company or its Title Insurance Agent and executed by the owner and the spouse, if any, of the owner; or
  2. no preliminary (unexecuted) settlement statement is requested from the Company or its Title Insurance Agent, by the lender named on the final settlement statement, prior to execution of the insured mortgage and promissory note by the owner or the spouse, if any, of the owner; or
  3. a preliminary (unexecuted) settlement statement was requested by and sent to the lender, and the fees on the final settlement statement executed by the owner, or the spouse, if any, of the owner exceed the amount of fees on the final (unexecuted) settlement statement sent to the lender prior to execution of the insured mortgage and promissory note secured thereby.
6. Blanks in an Instrument
  
  The Company must delete subparagraph (f) of paragraph 1 of the Supplemental Coverage Equity Loan Mortgage Endorsement ( T-42.1) if either (a) or (b) below occurs:
  1. There are any blanks in an instrument left to be filled in when executed by the owner of the land in an office of the Company or its Title Insurance agent, and:
    1. the instrument was prepared by the Company or its Title Insurance Agent, or
    2. the instrument is: (a) the purported written acknowledgment as to the fair market value; (b) the insured mortgage; (c) the promissory note secured thereby; or, (d) affidavits of compliance with Section 50(a)(6), Article XVI, Texas Constitution.
  2. There are any blanks in an instrument left to be filled in when executed by the owner of the land in any of the following instruments when same are delivered to the Company or its Title Insurance Agent: (i) the purported written acknowledgment as to the fair market value; (ii) the insured mortgage; (iii) the promissory note secured thereby; or, (iv) affidavits of compliance with Section 50(a)(6), Article XVI, Texas Constitution.
7. Attachment of Appraisal or Evaluation
  
  The Company must delete subparagraph (g) of paragraph 1 of the Supplemental Coverage Equity Loan Mortgage Endorsement ( T-42.1) if the insured does not furnish to the Company or its Title Insurance Agent prior to execution of the insured mortgage and the promissory note secured thereby:
  1. a document purporting to be written acknowledgment as to the fair market value of the land; and
  2. a purported appraisal or evaluation which is attached to the purported written acknowledgment.
8. Signature of Acknowledgment of Fair Market Value
  
  The Company must delete subparagraph (h) of paragraph 1 of the Supplemental Coverage Equity Loan Mortgage Endorsement ( T-42.1) if:
  1. the purported written acknowledgment as to the fair market value is not provided by the insured to the Company or its Title Insurance Agent prior to the execution of the insured mortgage or the promissory note secured thereby; or
  2. the purported written acknowledgment is not executed by the owner at an office of the Company or its Title Insurance Agent on the date that the insured mortgage and the promissory note secured thereby are executed.
9. No Land In Excess of Homestead Allotment
  
  The Company must delete subparagraph (i) of paragraph 1 of the Supplemental Coverage Equity Loan Mortgage Endorsement ( T-42.1) if: (a) or (b) below is true:
  1. The Company does not receive a satisfactory affidavit from each owner of the land, and that owner's spouse, stating that:
    1. all of the land is the homestead of the owner and that owner's spouse; and,
    2. no portion of the land is non-homestead property of the owner or owner's spouse; and
    3. the owner of the land, and that owner's spouse do not claim other land as homestead, unless that other land is described in the affidavit.
  2. The Company does not receive one of the following:
    1. a satisfactory surveyor's certificate or letter from a Texas Licensed Registered Professional Surveyor, stating the exact amount of acreage or square footage of the land and such other facts as may be required by the Company, including whether or not the land is located within the boundaries of an incorporated municipality; or,
    2. a computation of the acreage or square footage of the land made pursuant to a software program designed for calculation of the acreage or square footage of the land and computer generated drawings of the boundaries of the land pursuant to entry of the boundary description calls.
10. No Other Land With a Home Equity Mortgage
  
  The Company must delete subparagraph (j) of paragraph 1 of the Supplemental Coverage Equity Loan Mortgage Endorsement ( T-42.1) if the Company does not receive a satisfactory affidavit from each owner of the land and that owner's spouse, if any, stating:
  1. the owner and the owner's spouse, if any, do not have or claim any other land as homestead for tax or other purposes except: (i) the land described in Schedule A of the Commitment for Title Insurance; and (ii) other land described in the affidavit; and,
  2. any business operated by the owner or the spouse of the owner, if any, and situated upon land owned or leased by the owner or owner's spouse is not subject to an extension of credit pursuant to Subsection (a)(6) of Section 50, Article XVI, Texas Constitution; and,
  3. the residence, owned or leased by the owner or owner's spouse, if any, at which the owner and the owner's spouse live is not subject to an extension of credit pursuant to Subsection (a)(6) of Section 50, Article XVI, Texas Constitution.
  The Company may add the phrase "or in an adjoining county" after the phrase "described in Schedule A is located" in subparagraph (j) of paragraph 1 of the Supplemental Coverage Equity Loan Mortgage Endorsement ( T-42.1) if (i) the land is located within the boundaries of an incorporated municipality; (ii) the municipality is located in more than one county; and, (iii) the Company considers the risk insurable.
11. No Other Land With Released Home Equity Mortgage Within Past Twelve Months
  
  The Company must delete subparagraph (k) of paragraph 1 of the Supplemental Coverage Equity Loan Mortgage Endorsement ( T-42.1) if the Company does not receive a satisfactory affidavit from each owner of the land and that owner's spouse, if any, stating:
  1. the owner and the owner's spouse, if any, do not have or claim any other land as homestead for tax or other purposes except: (i) the land described in Schedule A of the Commitment for Title Insurance; and (ii) other land described in the affidavit; and,
  2. any business operated by the owner or the spouse of the owner, if any, and situated upon land owned or leased by the owner or owner's spouse has not been subject to an extension of credit pursuant to Subsection (a)(6) of Section 50, Article XVI, Texas Constitution, closed within one year prior to Date of Policy; and,
  3. the residence, owned or leased by the owner or owner's spouse, if any, at which the owner and the owner's spouse live has not been subject to an extension of credit pursuant to Subsection (a)(6) of Section 50, Article XVI, Texas Constitution, closed within one year prior to Date of Policy.
  The Company may add the phrase "or in an adjoining county" after the phrase "described in Schedule A is located" in subparagraph (k) of paragraph 1 of the Supplemental Coverage Equity Loan Mortgage Endorsement ( T-42.1) if (i) the land is located within the boundaries of an incorporated municipality; (ii) the municipality is located in more than one county; and, (iii) the Company considers the risk insurable.
12. Final Disclosure of Fees
  
  The Company must delete subparagraph (l) of paragraph 1 of the Supplemental Coverage Equity Loan Mortgage Endorsement ( T-42.1) if the Company or its Title Insurance Agent does not provide each owner with a copy of the final settlement statement at least one day before the business day that the owner executes the insured mortgage and the promissory note secured thereby. As used in this item 12, the term business day shall have the meaning assigned to such term by the Texas Finance Commissioner and/or the Texas Credit Union Commission pursuant to the authority granted such agencies by sections 11.308 and 15.413 of the Texas Finance Code, respectively.

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P-48 DATES ON AND AFTER JANUARY 1, 2000

Any date in any promulgated form adopted as "19___" shall on and after January 1, 2000, be changed to reflect the correct calendar year.

EFFECTIVE November 1, 1999

Continue to P-49. Annual Audit

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