Meanwhile, the American Land Title Association (ALTA) changed the loan policy and several endorsements from their 2006 editions, among other things. These were altered in 2021, and the updated policies and endorsements started to be implemented thoughtfully in 2022. As of January 2023, these will be the only ones accessible. Whether state insurance regulators approve the changes will determine the exact timeframe, but one may anticipate seeing the 2021 policy form very soon.

The standard policy provided to mortgage lenders has been the ALTA policy since 2006. Lenders are attempting to comprehend the changes that have occurred and what they can do to protect themselves as best they can throughout this transition. Here are some of the notable changes lenders should be aware of:

  1. E-signature and Remote Notary: The updated loan policy makes mention of electronic notarization, also known as “Remote Online Notarization,” and electronic signatures. If applicable, electronically signed or remotely notarized documents are now included in the coverage. Additionally, it is made clear that coverage includes policies and endorsements that are only provided electronically.
  2. Zoning and Regulation: Under Covered Risk #5, coverage has changed but remains the same. In addition to changing the meaning of “Public Records,” the changes have also established a new phrase, “Enforcement Notice,” which is used in place of any general recorded notice. In this approach, as long as the violation or enforcement is noted in the Enforcement Notice, limited to the scope of the breach, and recorded in the public records, the coverage remains the same.
  3. Priority: The most significant adjustment is in Covered Risk #10. In this case, the coverage is more limited and only partially encompasses what is deemed “Indebtedness.” Only the loan principal issued as of the policy’s effective date, accumulated interest, reasonable foreclosure costs, and protective advances given for insurance, real estate taxes, and HOA dues before securing title to the property are covered.

To read more on significant changes made to the policy, click here.