TX Underwriting Summary

Search/Exam

• Minimum Search Requirements -- Full plant search (can bring forward a starter if it is a full owners or loan policy – not short form)
• Plant or other search restrictions -- Yes, geographic plant in every county licensed must cover period back to 1979

• Additional Requirements for REO Searches -- NO
• Foreclosure Checklist -- N/A
• Special Searches Required (Code, HOA, Utilities)? -- No
• Survey Requirements -- YES – for survey deletions (and any short form policy); either new survey or existing survey and T-47 Survey Affidavit
• UPL Hot Button Issues -- Doc prep only

UPL

• Attorney involvement not required other than for doc preparation
• Fee attorneys act as escrow officers for title companies and receive a percent of premium and can have the title company’s name on door in return for audit of their escrow accounts.
• Third party attorneys operate under authority of Procedural Rule P-22, are not escrow officers and cannot receive Insured Closing Protection.
• Search, exam and closing the transaction can all be done by layperson.
• Title insurance agents must provide title evidence from a licensed abstract plant. Attorneys can, for an agreed upon fee, examine or close the transaction as defined in procedural rule P-1f of the Texas Basic Manual for Writing of Title Insurance promulgated by the Texas Insurance Department.

Witness Requirements

None Required. Two witnesses may substitute for notary acknowledgement but not a common or desireable practice.

Mortgage/Transfer Tax

None

Spousal Joinder Requirements/Homestead

• If the property is homestead of the owner and non-title holding spouse, joinder of the spouse is required.
• for mortgages, the non-titled spouse may sign only the lien instrument and not the debt instrument.
• A rural homestead is limited to 100 acres for a single person and 200 acres for a family.
• An urban homestead is limited to a lot or contiguous lots which do not exceed 10 acres.
• In order to be effective, a homestead disclaimer must designate other property then owned as homestead, and the other property must use up all of the declarant’s homestead allotment.
• Homestead property may not be conveyed or mortgaged without the joinder of both spouses. The rule applies whether the homestead is community property or the separate property of one spouse.

Community Property

• Texas is a community property state.
• All property acquired during marriage is presumed to be community, unless acquired by gift, devise or descent.
• A divorce decree should divest one spouse of the property and award the property to the other spouse.
• If community property is not disposed of in a divorce decree the parties thereafter hold the property as tenants in common.
• Community property cannot be conveyed or mortgaged without the consent of both spouses.
• A deed by one spouse of community property to a third party is void, but creates a cloud on title.
• Texas follows the “inception of title” rule. Whether something is separate or community is determined by the facts existing at the time the property was acquired.

Power Of Attorney

• The statutory form for a durable POA is found in Ch. 751 and 752 of the Estates Code.
• The POA must be recorded if it is used in a real property transaction.
• A POA may be used in a home equity transaction only if the POA was signed in the office of a lender, an attorney, or a title company, all of which must be in Texas.
• POAs signed in other states are acceptable in Texas if they are executed in conformity with the laws of the state where they were signed.
• Agent may only exercise authority specifically granted in the power of attorney and any authority reasonably necessary to give effect to that express grant of specific authority.
• A general POA, such as “to do all acts that the principal can do” are not express grants of specific authority and are not accepted by WFG.

Construction Liens

If the property is homestead, any lien securing a construction loan must be evidenced by a mechanic’s lien contract signed by both spouses and filed for record prior to the commencement of construction. If this requirement is not satisfied, the lien is void.

Additionally, if the property is homestead and the construction constitutes “repairs and renovation” as opposed to “new construction” the lien is void unless at least 5 days elapsed between the application for credit and the signing of the lien contract. Additionally, the contract must provide for a 3 day right of rescission, and must be signed at the office of the lender, an attorney or a title company, any of which must be in Texas. Texas Constitution, Art. XVI, Sect. 50(a)(5). On non-homestead property, a valid construction lien may be evidenced by a deed of trust securing advances for the purpose of construction.

Mortgages And Trust Deeds

• Most mortgages in Texas take the form of deeds of trust. The property owner conveys the property, in trust, to the trustee; the trustee has no authority to do anything unless and until the beneficiary (the lender) instructs the trustee to act.
• When the loan is paid off, the release comes from the beneficiary (the lender) and not from the trustee.
• A mortgage lien on real property is barred by limitations 4 years after the date of maturity of the loan, which is the date the final payment is due.

Foreclosure Review

• We will not insure the title of someone who was the purchaser at a foreclosure sale; we will not insure until there is a subsequent arm’s length sale.
• Always leave the ‘rights of parties in possession’ exception in the commitment/policies. You may remove this exception when requested by the proposed lender. You may remove this exception when requested by the proposed buyer only upon compliance with Rule P-3, which allows the agent to make a reasonable charge for inspecting the property.

1. Review the Appointment of Substitute Trustee; contact Underwriting if you believe the Appointment was signed by someone other than the mortgagee, the mortgage servicer, or an attorney authorized by the mortgage servicer.

Note:	The “mortgage servicer” is the last entity to whom a debtor has been instructed by the current mortgagee to send payments; the mortgagee and the mortgage servicer may be the same entity.

• You may accept as true the recitals contained in an affidavit or incorporated into the substitute trustees’ deed. The recitals should cover the following:
  • A Notice of Sale was posted at the courthouse door of each county in which the property is located, at least 21 days before the sale;
  • A copy of the posted Notice of Sale was filed in the office of the county clerk of each county in which the property is located, at least 21 days before the sale;
  • At least 21 days before the sale, the servicer sent written notice of the sale to each debtor who is obligated to pay the debt, according to the records of the servicer; the notice was sent by certified mail to the debtor’s last known address, according to the records of the servicer.
  • The property was sold between the hours of 10:00 AM and 4:00 PM, and the sale commenced not later than 3 hours after the earliest time stated in the Notice of Sale;
  • If the property was the debtor's residence, the servicer served written notice of default on the debtor, at the debtor’s last known address according to the records of the servicer, and the debtor was given at least 20 days to cure the default before the debt was accelerated and notice of sale was given;
  • The debtor was alive at the time of the foreclosure; and,
  • The debtor was not on active military duty at the time of the sale, or within 9 months prior to the sale.

If you have reason to believe that any recital is inaccurate, please contact Underwriting before proceeding.  

• We will also insure subsequent sales and mortgages by parties who acquired title from a foreclosure sale purchaser, provided (1) your exam does not uncover any foreclosure related issues and (2) the seller or borrower has an existing owner policy. If no prior policy is available, contact Regional Underwriting for guidance.

Who May Serve As Trustee On Deed Of Trust

• Any person or entity may be named as the trustee. Trustee does not have to be a resident of Texas.
• An underwriter or title agent may be designated as the trustee, but it is not customary or required.
• In actual practice, the named trustee is almost always removed and a substitute trustee (usually an attorney) is appointed by the lender to handle the foreclosure.

Time Limitations

• US Judgment Liens -- 20 years, renewable for 20 years
• State Court Judgment Liens -- Money judgments – 10 years renewable for 10 years
• Federal Tax Liens -- 10 years (+30 days); can be refiled
• State Tax Liens --
• Estate Tax Lien -- Federal 10 years
• State Inheritance Tax Liens --
• Mechanics Liens -- ___ if homestead; ___ for non-homestead property unless action to foreclose is commenced
• Financing Statements -- 5 years; 30 years for Manufactured Housing
• Mortgages -- 4 years from Maturity Date
• HOA Liens --
• Condominium assessments --
• Child Support Liens --

Odd Stuff

• Underwriter can sign a release affidavit after settlement agent has paid the loan and given lender notice that the loan was paid, no release has been sent by lender, and that the affidavit is being filed as a release. Proof of payment must be attached to the letter to the lender.
• Texas practices are highly regulated with details set forth in the Texas Basic Manual for Writing of Title Insurance
• General exceptions are not allowed if an insured objects (P-5). Parties in possession is governed by P-3. Mechanic’s liens are governed by P-8. Taxes and rollback taxes are printed in the commitment and policy.
• Texas forms, policies, commitments, binders and endorsements are promulgated by the Insurance Commissioner. After May 1, 2008, they are essentially the ALTA forms with minor variations.
• By law, Texas title insurance policies may not insure marketable title.Texas policies insure good and indefeasible title.
• No usury coverage available.
• Definitions in Texas Rules:
  • Escrow Officer - An attorney, or bona fide employee of either an attorney licensed as an escrow officer, bona fide employee of a title insurance agent, or bona fide employee of a direct operation whose duties include any or all of the following: (1) countersigning title insurance forms; or (2) supervising the preparation and supervising the delivery of title insurance forms; (3) signing escrow checks; or (4) closing the transaction.
  • Closing the Transaction - The investigation made on behalf of a title insurance company, title insurance agent or direct operation before the actual issuance of the title policy to determine proper execution, acknowledgment and delivery of all conveyances, mortgage papers, and other title instruments which may be necessary to the consummation of the transaction and includes the determination that all delinquent taxes are paid, all current taxes, based on the latest available information, have been properly prorated between the purchaser and seller in the case of an Owner’s Policy, the consideration has been passed, all proceeds have been properly disbursed, a final search of the title has been made, and all necessary papers have been filed for record.