Tuesday, July 24, 2007

query: what is a marked-up title commitment first american

Well, it doesn't matter who the title underwriter is, First American or another, the mark-up is pretty much the same.

As we've discussed before, the title commitment is a promise to insure subject to certain conditions outlined in Schedule B 1 and certain exceptions outlined in Schedule B 2.

Lenders and consumers should have received a copy of the title insurance commitment to read and approve prior to closing.  The mark-up of the commitment is done by hand, would be available immediately after closing and precedes the issuance of the actual policies.

The mark-up of the title commitment by the title agent or insurer is done in two stages. Schedule B 1 is marked "complied with" or "okay" - or some such indication that the conditions have been cleared. Anything not cleared on Schedule B 1 would then be added to Schedule B 2 as an exception to coverage.

Next Schedule B 2 is marked up and the notes are a little more complicated. The title agent will review each exception and, if needed, make a note. For instance, our gap coverage clause would be marked "out" which means it will not show as an exception in the final policies. The exception for possession of the premises would be marked "owner only" meaning that it will not be an exception in the loan policy but would remain as an exception in the owner policy. Exceptions being removed through endorsements would have the endorsement number noted in the margin next to the exception. Exceptions which remain in the policies without limitation are left unmarked.

This final mark-up lays out the instructions for preparation of the final policies and when coupled with a fully executed HUD-1 form is evidence of insurance.

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