MORTGAGE LOAN MODIFICATION ENDORSEMENT PREMIUM REQUIREMENTS

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 under30%
3 – 4 years40%
4 – 5 years50%
5 – 10 years60%
Over 10 years100%

 

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.

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