Archives

There is no premium required for the following endorsements, using the General Endorsement Form, which are permitted without specific approval from the Department of Insurance:

• Endorsements correcting mistakes
• Future Insurance (continuing liability under existing policies)
• Endorsements deleting exceptions which no longer affect title to the land
• Changes in effective dates (Loan Policies Only), provided the endorsement does not insure a mortgage modification requiring a premium (refer to Mortgage Modification Endorsements)
• Insurance against the attempted enforcement of known claims for ascertainable sums of money in reliance on security commensurate with such risk
• Deletion of General Exceptions

All other endorsements issued in other states are prohibited from issuance in Florida including the following:

1. Doing Business Endorsement
2. Non Imputation Endorsement (imputation of knowledge)
3. Access
4. Location
5. Expanded Insured Endorsement
6. Street Assessment Endorsement
7. Zoning Endorsement
8. Usury

Endorsements which change the Date of Policy or Increase the Amount of the Loan Policy are done through issuance of a General Endorsement Form which amends the policy to set forth all new matters affecting title since the original or last updated Date of Policy. The premium for these endorsements is determined as follows:

Modification Endorsement (General)

The premium for an endorsement to a loan policy insuring a modification of the mortgage is based upon the substitution loan rate applicable to the outstanding principal balance of the loan. This applies to ALL modifications other than the following “Exempted Modifications”:

• extension of the time for repayment; (2) decrease in the interest rate, provided that, if the rate is variable, the “cap” is not greater than the original “cap” and/or the “cap” is not greater than the original fixed rate; (3) increase in the interest rate, provided the endorsement contains an exception for the loss of priority occasioned by the increase; (4) extension of the term; (5) release of a portion of the secured property; and/or

• modification which provides for a correction to either perfect the lien of the insured mortgage or comply with the terms of lender’s original commitment; (7) future advances made pursuant to 04, F.F. subject to a separate Future Advance Endorsement premium; and/or (8) adding of additional parcels to a mortgage securing a revolving line of credit subject to a separate Spreader Endorsement premium.

Note: As to any mortgage modification which merely constitutes one or more of the Exempted Modifications no premium is due; and, if the insured does not require a change in the Date of Policy, ALTA 11-06 Mortgage Modification Endorsement may be used in lieu of a General Endorsement Form (refer to the underwriting procedures applicable to said ALTA 11-06 Mortgage Modification Endorsement).

Substitution Rate Schedule:

3 years or under 30% 3 – 4 years 40% 4 – 5 years 50% 5 – 10 years 60% Over 10 years 100%

EXAMPLE:

Unpaid Principal Balance of Loan of $100,000 under 3 years old Premium on Unpaid Principal Balance of the Loan Multiplied by Percentage based on age of loan:

Original Issue Rate                            $575.00

Substitution Rate                                   x30%

Applicable Rate                                 $172.50

Note: Any modification which in addition to any other changes also insures a Future Advance under a non-revolving line of credit mortgage requires an additional premium for the amount of the Future Advance as hereafter indicated.

Future Advance Endorsement (Non-Revolving Line of Credit Mortgage)

The premium for an endorsement to a loan policy insuring a Future Advance under a non- revolving line of credit mortgage is based upon the additional premium for the amount of the Future Advance at the applicable rate category.

 

EXAMPLE:Unpaid Principal Balance of Original Loan	$100,000
Plus: Amount of Future AdvanceEquals: New Insured Amount	$+50,000$150,000
Premium on New Insured Amount	$ 825.00
Minus: Premium on Unpaid Principal Balance of Loan	$ -575.00
Equals: Premium for the Modification	$ 250.00

Spreader Endorsement (Mortgage Securing a Revolving Line of Credit)

The premium for an endorsement to a loan policy insuring a Mortgage securing a Revolving Line of Credit for adding additional property is based on the value of the additional property being added.

 

EXAMPLE:
Value of Lot Added	$100,000
Premium	$ 575.00

NOTE: If the insured mortgage does NOT secure a Revolving Line of Credit, the premium due for a modification adding additional property is calculated in accordance with the Substitution Rate Schedule as set forth above plus, if applicable, the premium due for any Future Advance made in conjunction with the addition of the additional property.

The minimum premium is $25.00 per endorsement on 1-4 family unit residential properties with a $100 maximum premium per endorsement; and on all other properties other than 1- 4 family unit residential properties the minimum premium for endorsements is $100.00 per endorsement with no maximum.

This endorsement is to be given for Loan Policies only. This endorsement insures the validity and enforceability as well as the priority of those provisions in the insured mortgage which provide for “shared appreciation interest”. Such interest is defined to mean  interest which is calculated pursuant to a formula contained in the insured mortgage which is payable out of the amount, if any, by which the insured land has appreciated in value from and after the date of the mortgage.

This endorsement excludes loss or damage resulting from (i) usury, (ii) any consumer credit protection or truth-in-lending law, or (iii) bankruptcy.

If the formula set forth in the mortgage provides that the shared appreciation is not interest for the making of the loan but rather a payment of some form of profit participation arrangement between the parties, the endorsement may not be issued.

The minimum premium for this endorsement as to an owner’s policy is ten percent (10%)  of the premium for the owner’s policy. The minimum premium for this endorsement as to a loan policy is ten percent (10%) of the premium for the loan policy OR, if the loan policy is being issued simultaneously with an owner’s policy, the minimum premium is ten percent (10%) of the total premium for the owner’s and loan policies.

This endorsement may be given on both an Owner’s Policy and a Loan Policy and applies to those cases in which the insured land is “filled land” in formerly navigable waters such as the Atlantic Ocean or Gulf of Mexico and their various bays and inlets together with various navigable lakes and rivers. Although the owner has good title to the filled land, the United States government, pursuant to the Commerce Clause of the U.S. Constitution, has the right to take any and all action necessary to aid the flow of commerce over the adjacent waterways.

This would include the right to dredge the land and install aids to navigation on the lands, all without any compensation to the owner of the formerly navigable waters.

In such cases, the proposed insured may request issuance of a Florida Navigational  Servitude Endorsement. The endorsement specifically insures against loss or damage  from the “forced removal” of improvements in connection with the exercise of these rights. In most cases, the property will be located in an area in which there is little possibility that “forced removal” of improvements will be necessary to aid navigation and the endorsement can be given.

However, if the insured premises are located in an area where dredging of the land, or removal of docks or marinas, may reasonably be necessary to widen a channel or otherwise provide for better navigation, this endorsement cannot be issued. (Example: if the subject property is located on a beach along the shores of the Atlantic Ocean or Gulf of Mexico far away from either an existing channel or inlet, the possibility of the exercise of the rights by the United States would be highly unlikely and the coverage may be given.)

The minimum premium is $25.00 per endorsement on 1-4 family unit residential properties with a $100 maximum premium per endorsement; and on all other properties other than

1-4 family unit residential properties, the minimum premium for endorsements is $100.00 per endorsement with no maximum.

This endorsement may be issued with respect to either an Owner’s Policy or Loan Policy to insure that the parcels of land described in Schedule A are contiguous to each other and that there are no gaps or gores between said parcels and that, taken as a tract, they constitute one complete parcel of land.

In order to provide this endorsement, the survey or a separate surveyor’s certificate must confirm that the parcels are contiguous and there are no gaps or gores between said parcels.

(CAUTION: Legal descriptions which contain two parcels of land in adjoining sections or adjoining lots in a subdivision plat would seem to be contiguous; however, an actual survey of the land may reveal that a gap exists between the two sections lines due to the original monuments established at the time of the government survey or between the two lots due to an error in the plat.)

The minimum premium for this endorsement is $25.00.

This ALTA 14-06 Endorsement may be used to insure the validity and priority of the insured mortgage as security for future advances made pursuant to any mortgage which contains a future advance clause in accordance with Section 697.04, Florida Statutes, the requirements of which are set forth below. The endorsement also amends the standard provisions of the Loan Policy which provide that coverage is reduced as the principal indebtedness is repaid due to amortization by, instead, providing that coverage is based on the balance of the loan irrespective that it may increase or decrease from time to time; and, as a result, it can be used to insure future advances under a mortgage which secures a revolving line of credit. In addition to insuring such future advances, the endorsement further insures that the lien of the mortgage secures interest on said advances even if the rate of interest is subject to change and compounding of interest on interest. The following  is a more detailed explanation of the FIVE (5) forms of affirmative coverage provided by the endorsement:

1)     Subparagraph 2a. insures against the invalidity or unenforceability of the lien of the insured mortgage as security for advances of principal (including expenses of foreclosure and amounts advanced for taxes and insurance and to assure compliance with laws, protect the lien of the insured mortgage and prevent deterioration of the improvements) made subsequent to the date of the policy pursuant to the terms of the note or loan agreement the repayment of which is secured by the insured mortgage.

• Subparagraph insures against lack of priority of the lien of the insured mortgage as to advances of principal made subsequent to the date of the policy pursuant to the terms of the note or loan agreement the repayment of which is secured by the insured mortgage over any lien or encumbrance on title to the land. 

 

• Subparagraph insures against the invalidity or unenforceability or lack of priority of the lien of the insured mortgage as security for the indebtedness, advances and unpaid interest secured by the insured mortgage resulting from (i) re-advances and repayments of indebtedness, (ii) earlier periods of no indebtedness owing during the term of the insured mortgage, or (iii) failure of the insured mortgage to comply with the requirements of state law to secure future advances.

 

• Subparagraph 3a. insures against the invalidity or unenforceability of the lien of the insured mortgage resulting from any provisions of the note or loan agreement for (i) interest on interest, (ii) changes in the rate of interest, or (iii) the addition of unpaid interest to the indebtedness.

 

• Subparagraph insures against lack of priority of the lien of the insured mortgage as security for the indebtedness, including any unpaid interest added to principal in accordance with the note or loan agreement, interest on interest, or interest as changed in accordance with the provisions of the insured mortgage, which lack of priority is caused by (i) changes in the rate of interest, (ii) interest on interest or, (iii) increases in the indebtedness resulting from the addition of unpaid interest.

The term “Changes in the rate of interest” as used in this Endorsement means only those changes in the rate of interest calculated pursuant to a formula provided in the note, loan agreement or insured mortgage at the date of the policy.

REQUIREMENTS: This endorsement may not be given unless the mortgage complies with the future advance requirements of Section 697.04, Florida Statutes, which in substance requires that the mortgage expressly provide that its lien secures not only existing indebtedness, but also future advances, whether such advances are obligatory or to be made at the option of the lender, or otherwise, as are made within 20 years from the date of the mortgage, to the same extent as if such future advances were made at the time of execution of the mortgage and although there may be no advance made at the time of the execution of such mortgage and no indebtedness outstanding at the time an advance is made. The statue further requires that the mortgage expressly specify the maximum amount of indebtedness that may be secured pursuant to the future advance clause and, although the amount of outstanding indebtedness may decrease or increase from time to time, the amount secured by the mortgage may not at any one time exceed the maximum principal amount specified, plus interest thereon.

EXCLUSIONS FROM COVERAGE: This endorsement does not insure against loss or damage (and the Company will not pay costs, attorneys’ fees or expenses) resulting from:

1. The invalidity, unenforceability or lack of priority of the lien of the insured mortgage as security for any:
   1. Advance made after a Petition for Relief under the Bankruptcy Code (11 U.S.C.) has been filed by or on behalf of the mortgagor; or
   2. Advance made subsequent to 20 years after the date of the insured mortgage or after a notice has been recorded in the Public Records limiting the maximum principal amount that may be secured to the extent the advance causes the outstanding principal balance to exceed the amount stated in the notice.
2. The lien of real estate taxes or assessments arising after the date of the policy;
3. The lack of priority of the lien of the insured mortgage as security for any advance to a federal tax lien, which advance is made after the earlier of (i) actual knowledge of the insured that a federal tax lien was filed against the mortgagor, or (ii) the expiration, after notice of a federal tax lien filed against the mortgagor, of any grace period for making disbursements with priority over the federal tax lien provided in the Internal Revenue Code (26 U.S.C.);
4. Any federal or state environmental protection lien; or
5. Usury or any consumer credit protection or truth-in-lending law.

This endorsement may be used by itself only to insure a modification that: (i) extends the time for repayment; (ii) decreases the interest rate, provided that, if the rate is variable, the cap is not greater the original the original fixed rate; (iii) extends the term; (iv) releases a portion of the secured property; or (v) provides a correction to perfect the lien or comply with the terms of the lender’s original commitment. Since the foregoing modifications under the insurance regulations do not require a premium, there is no premium due for this endorsement.

As to all modifications other than the above, the ALTA 11-06 Mortgage Modification Endorsement cannot be issued unless a separate simultaneous endorsement is issued which: (i) amends the loan policy to update its effective date; (ii) changes the amount of the coverage to the current principal balance; and (ii) amends the exceptions on Schedule B to reflect all matters affecting title since the original or previously amended effective date of the policy. The separate endorsement is required because the ALTA 11-06 Mortgage Modification Endorsement by its printed terms does not change the effective date or amount of the policy. Since, under the insurance regulations, a mortgage modification premium must be paid on the simultaneous endorsement updating  the policy, there is no separate premium due for the ALTA 11-06 Mortgage Modification Endorsement.

This endorsement provides TWO (2) affirmative coverages as follows:

       • Paragraph 1 insures against the invalidity or unenforceability of the lien of the insured mortgage as modified by the Mortgage Modification Agreement being insured.

       • Paragraph 2 insures against lack of priority of the lien of the insured mortgage as of the date of the endorsement over defects in or liens or encumbrances on title except as to those liens, encumbrances or other matters added as exceptions in the blank space provided at the end of the paragraph.

If the ALTA 11-06 Mortgage Modification Endorsement is issued by itself, Paragraph 2 of the endorsement requires that all liens, encumbrances and other matters affecting title recorded after the original or previously amended effective date of the policy must be listed as exceptions in the blank space provided for such purpose at the end of said Paragraph 2. If the ALTA 11-06 Mortgage Modification Endorsement is issued in conjunction with a simultaneous endorsement updating the effective date of the policy and setting forth all matters affecting title since the original or previously amended effective date of the policy, insert the phrase “those defects, liens or encumbrances, if any, set forth on the endorsement updating the policy issued simultaneously with this endorsement” in the blank space at the end of Paragraph 2 of the ALTA 11-06 Mortgage Modification Endorsement.

EXCLUSIONS FROM COVERAGE: This endorsement does not insure against loss or damage (including costs, attorney’s fees or expenses) by reason of any claim that arose out of the transaction creating the modification under federal bankruptcy, state insolvency, or similar creditor’s rights laws based on the modification being deemed either: (i) a fraudulent conveyance or transfer; or (ii) a preferential transfer, except where the preferential transfer results from the failure to timely record the modification or such recordation fails to impart notice to a purchaser for value or to a judgment or lien creditor.

The minimum premium for this endorsement is $25 .00 on 1-4 family unit residential property with a $100.00 maximum. The premium for this endorsement for commercial and all other properties is a minimum of $100.00 with no maximum.

The first sentence of this endorsement changes the name of the insured under the Loan Policy to the name of the Assignee of the insured mortgage by insertion of the name of such Assignee in the blank space provided for said purpose at the end of said first sentence.

The endorsement affirmatively insures against loss or damage sustained by the Assignee of the insured mortgage by reason of the matters set forth in Subparagraphs 1a. and 1b.as follows:

Subparagraph 1a: Failure of the Assignment of Mortgage described in the blank space provided at the end of Subparagraph 1a. to validly assign the insured mortgage to the Assignee named in the first sentence of the endorsement.

Subparagraph 1b: Any modification, partial or full reconveyance, release, or discharge of the lien of the insured mortgage recorded on or prior to the date of the endorsement in the public records other than those shown in the policy or a prior endorsement, except for any such instrument identified in the blank space provided at the end of said Subparagraph 1b. (refer to Search Requirements set forth below).

CONDITIONS AS TO EFFECTIVENESS: This endorsement shall not be effective unless at the date of the endorsement: (i) the note or notes secured by the lien of the insured mortgage have been properly endorsed and delivered to the Assignee, or (ii) if the note or notes are transferable records, the Assignee has “control” of the single authoritative copy of each “transferable record” as these terms are defined by applicable electronic transactions laws.

EXCLUSIONS FROM COVERAGE:This endorsement does not insure against loss or damage, and the Company will not pay costs, attorneys’ fees or expenses by reason of any claim that arises out of the transaction creating the assignment by reason of the operation of federal bankruptcy, state insolvency, or similar creditors’ rights laws that is based on:

1. The assignment being deemed a fraudulent conveyance or fraudulent transfer;

or

2. The assignment being deemed a preferential transfer.

The minimum premium for this endorsement is ten percent (10%) of the premium for the loan policy OR, if the loan policy is being issued simultaneously with an Owner’s policy, the minimum premium is ten percent (10%) of the total premium for the Owner’s and Loan Policies.

Subject to the Exclusions from Coverage, the Exceptions from Coverage contained in Schedule B, and the Conditions of the Policy, this ALTA 9-06 Endorsement may be used to provide affirmative coverage on a Loan Policy against encroachments, set back violations and other matters set forth below. This 9-06 Endorsement contains EIGHT (8) forms of affirmative coverages as follows:

• Subparagraph 1(a) insures there are no covenants, conditions or restrictions under which the insured mortgage can be divested, subordinated or extinguished or its validity, priority or enforceability impaired. Due to Section 720.3085, Florida Statutes, all loan policies insuring a mortgage subject to homeowner’s assessments executed and recorded after July 1, 2008, must contain the following exception:

“Any loss or damage caused by a lien for homeowner’s association liens pursuant to Section 720.3085, Florida Statutes, notwithstanding assurances to the contrary in the Restrictions, Easements, Minerals Endorsement, if any, attached.”

As to any mortgage executed and recorded prior to July 1, 2008 subject to homeowner’s assessments, in order to provide the coverage under Subparagraph 1(a) of this  endorsement it is necessary to confirm that the recorded restrictions do not provide that the lien for assessments is effective as of the date of recording of the restrictions (instead of claim of lien) or that such lien does not otherwise have express priority over the lien of mortgages; otherwise, this coverage must be deleted.

Due to Section 718.116 Florida Statutes, all loan policies insuring a mortgage on a condominium unit must contain the following exception:

“Any loss or damage caused by a lien for condominium assessments pursuant to Section 718.116(5)(a), Florida Statutes, notwithstanding assurances to the contrary in the Restrictions, Easements, Minerals Endorsement, if any, attached.”

• Subparagraphs 1(b)(1),(3),(4) and (5) insure that unless expressly excepted in Schedule B, there are: (a) no present violations of any covenants, conditions or restrictions or violations of building setback lines in such covenants, conditions or restrictions or on the subdivision plat; (b) no encroachments of improvements onto adjoining land or from adjoining land onto insured land; (c) no encroachments of improvements onto to any easement; and (d) no recorded notices of violation of covenants, conditions and restrictions relating to environmental protection. Therefore, if the survey discloses that there is any present violation of setback or other restrictive covenants, conditions or restrictions or any encroachment of existing improvements either onto adjoining land or from adjoining land onto the insured land or into easements, Schedule B must contain a specific exception to such (CAUTION: The survey will generally only show the building setbacks on the subdivision plat; therefore, if the building setbacks are contained in the restrictions, a copy thereof must be provided to the surveyor for adding to the survey). Also, Schedule B must contain a specific exception as to any recorded notice of a violation of any environmental covenant, condition or restriction.
• Subparagraph 1(b)(2) insures that unless expressly excepted in Schedule B, no covenants, conditions or restrictions : (i) establish an easement on the land; (ii) provide for a lien for liquidated damages; (iii) provide for a private charge or assessment; or (iv) provide for an option to purchase, a right of first refusal or the prior approval of a future purchaser or occupant. Therefore, any exception in Schedule B as to any covenant, condition or restriction which contains any of the foregoing provisions must specifically set forth such fact.

 

• Paragraph 2 insures that any future violation of any existing covenants, conditions or restrictions affecting the property will not result in the invalidity, loss of priority or unenforceability of the lien of the mortgage or result in a loss of title if the insured acquires title in satisfaction of the indebtedness secured by the mortgage. Therefore, if any recorded covenants, conditions or restrictions contain any forfeiture or right of reversion, this coverage must be delete

 

• Subparagraph 3(a) insures against damage to existing improvements (excluding lawns, shrubbery or trees) which results from the rights of a holder of the easement to maintain the easement for the purposes granted under the easement. Therefore, if an encroachment is of sufficient nature that, in the exercise of the rights under the easement, damages are likely to occur to the improvements on the property, this coverage must be delete (CAUTION: a specific exception to the encroachment in Schedule B is not sufficient to delete this affirmative coverage).

 

• Subparagraph 3(b) insures against damage to existing improvements (excluding lawns, shrubbery or trees) as a result of the future exercise of the right to use the surface of the land for the extraction of minerals pursuant to a mineral reservation excepted in Schedule B. Therefore, if the right of entry has not been expressly released or released by statue as to any mineral reservation excepted in Schedule B (excluding the general preprinted mineral exception #6), this coverage must be deleted in the manner hereafter set forth. (CAUTION: a specific exception to the mineral reservation in Schedule B is not sufficient to delete this affirmative coverage).

 

• Paragraph 4 insures against a final court order or judgment requiring removal from any land adjoining the insured land of any encroachment excepted in Schedule B. Therefore, if any improvement encroaches onto adjoining land and is of a nature which is not easily removable, this coverage must be delete (CAUTION: a specific exception to the encroachment in Schedule B is not sufficient to delete this affirmative coverage).

 

• Paragraph 5 insures against a final court order or judgment denying the right to maintain existing improvements on the land because of a violation of any covenants, conditions or restrictions or violations of the building setback lines in such covenants, conditions or restrictions or on the subdivision plat. Therefore, if any of the existing improvements violate any of the covenants, conditions or restrictions or the building setback lines in such covenants, conditions or restrictions or on the subdivision plat and such violation is not minimal in nature, this coverage must be deleted. (CAUTION: a specific exception to the violation in Schedule B is not sufficient to delete this affirmative coverage).

 

Deletion of coverage: In all cases in which a portion of the coverage afforded by this Endorsement must be deleted as indicated above, this should be accomplished by adding to the exception substantially the following phrase:

“Coverage afforded under (insert appropriate Paragraph #) of the Restrictions, Easements, Minerals Endorsement, if any, attached as to this exception is not available and is hereby deleted from said endorsement.”

The applicable Subparagraph # should be inserted in the blank space of the above exception:

Subparagraph 1(a) — As to mortgages recorded prior to July 1, 2008 subject to homeowner’s restrictions or covenants with “super lien priority”

Paragraph 2 — As to any restrictions containing a forfeiture or right of reversion Subparagraph 3(a) — As to damage to improvements which result from encroachments into easements

Subparagraph 3(b) — As to mineral reservations for which the right of entry has not been released

Paragraph 4– As to encroachments onto adjoining land

Paragraph 5– As to violations of restrictions and/or building setbacks