The August heat and humidity in Richmond has fried this author’s brain, so today’s blog will contain several stories I found to be of interest.

ALTA Approves More New Endorsements

The ALTA approved two new endorsement forms, which will carry a publication date of 8-1-2012.  The first is the ALTA Endorsement 30.1-06 (Commercial Participation Interest), which insures the validity and priority of a lien securing participation interest on commercial property.  Participation interest is defined in the endorsement as “those elements of interest, established and calculated pursuant to the formula provided in the Loan Documents, that are payable or allocated to the Insured based upon:

  1.  the borrower’s equity in the Title;
  2. the increase in value of the Title; or
  3. cash flow.”

The endorsement contains 5 exclusions, including exclusions  for usury, unconscionability, disputes over the amount of the Participation Interest, the effects of mortgage recording taxes on the validity or enforceability of the Insured Mortgage, and mechanic’s liens.

The second new endorsement is the ALTA Endorsement 32.2-06 (Construction Loan – Loss of Priority – Insured’s  Direct Payment).  This new endorsement is in the ALTA 32 Construction Loan series, all of which deal with mechanic’s lien priority issues on Loan Policies.  The new endorsement is similar to the previous 32.1-06 endorsement, but this one insures against loss of priority of the lien of the Insured Mortgage as security for Construction Loan Advances paid directly by the Insured or on the Insured’s behalf over subsequently filed Mechanic’s Liens if the advance was made on or before Date of Coverage, and at that time, no Mechanic’s Lien has been filed or recorded in the Public Records.

You can find the new endorsements on the ALTA website:  www.alta.org.

Pennsylvania and Alaska Move Towards Electronic Filing

The Anchorage, Alaska District Recorder’s Office has started accepting electronically filed land record documents such as deeds, mortgages and reconveyances on a limited basis.  Over the next several months, other districts will start accepting documents for electronic recording.

In Pennsylvania, recent legislation establishing uniform standards for county recorders to electronically record deeds, mortgages, leases and other real property documents was signed into law by the Governor on July 5, 2012.  The legislation sets up a commission to create the standards so that electronic recording will be uniform throughout the state.  The legislation does not require electronic recording and allows paper documents to continue to be used.  While the adoption of the new legislation does not mean that the county recorders will be accepting electronic filing any time soon, it does mean that when counties do start adopting the process, the requirements will be standard throughout the Commonwealth.

Mortgage Backed Securities Delinquencies to Level Off Soon?

According to a recent Wall Street Journal article, the delinquency rate of commercial mortgage-backed securities reached a record level in July, but analysts believe that the sharp increase that has been witnessed this year will soon plateau.  According to Trepp LLC, as of last month, 10.34% of the mortgages that had been bundled into CMBS were delinquent for more than 30 days.  That is an increase over June’s rate of 10.16% and 9.37% in February.  However, July’s spike might have been caused by the large number of five-year loans that were made in 2007 and came due this year.  The potential for reaching a plateau is that after 2007, the CMBS market cratered, and so we should be seeing fewer delinquencies, since there were so few commercial mortgages being made during the recession.

Janice Carpi is the National Underwriting Counsel for GRS Group jcarpi@grs-global.com