The standard coverage policy of the American Land Title Association (ALTA) typically only relates to issues that can be discovered by carrying out a public records search. The standard ALTA policy guarantees protection in situations such as where the grantor of the loan cannot complete the transaction, improper record of conveyance instrument, instances of forgery, fraud, incompetency, or misrepresentation concerning the transaction.
As much as the standard ALTA loan policy has several significant coverages for the lender, most lenders still have a massive reservation with the mechanic’s lien exception, which is not shown by the public record and, as such, not covered by the standard ALTA policy. This prompts the majority of lenders to get an ALTA Extended Title Policy to cover for the mechanic’s lien exception.
ALTA policies are typically used in transactions where the parties are willing to take on more risk to save money; this is a scenario that frequently occurs in small transactions, related-party transactions, transactions that do not use institutional lenders, land trusts, or conservation projects with no plans for improvements.
By eliminating most of the Western Regional Exceptions that constrain the ALTA policy, the ALTA Extended policy merely expands the scope of the regular coverage policy to accommodate some situations that are not specified in the public records. A cautious lender will always demand a 2006 ALTA Extended policy without Western Regional Exceptions. However, suppose a title company asks the lender to take ALTA insurance with Western Regional Exceptions. In that case, the lender must now accept countless additional unknown risks that a wise lender would reject.
To read more about the ALTA extended title policy and the benefits to a private lender, click here.
https://fortralaw.com/what-is-an-alta-extended-title-policy/
About Note Servicing Center
Note Servicing Center provides professional, fully compliant loan servicing for private mortgage investors so they can avoid the aggravation of servicing their own loans and just relax and get paid.
Contact us today for more information.
Share This Story, Choose Your Platform!
Related Posts
Disclaimer
The information provided in this article is for general educational and informational purposes only and does not constitute legal, financial, investment, tax, or professional advice. Note Servicing Center, Inc. is a licensed loan servicer and does not provide legal counsel, investment recommendations, or financial planning services. Reading this content does not create an attorney-client, fiduciary, or advisory relationship of any kind.
Nothing in this article constitutes an offer to sell, a solicitation of an offer to buy, or a recommendation regarding any security, promissory note, mortgage note, fractional interest, or other investment product. Any references to notes, yields, returns, or investment structures are illustrative and educational only. Past performance is not indicative of future results, and all investments involve risk, including the potential loss of principal.
Note investing, real estate transactions, and lending activities are subject to federal, state, and local laws that vary by jurisdiction and change over time. Before making any decision based on the information in this article, you should consult with a qualified attorney, licensed financial advisor, certified public accountant, or other appropriate professional who can evaluate your specific circumstances.
While we make reasonable efforts to ensure the accuracy of the information presented, Note Servicing Center, Inc. makes no warranties or representations regarding the completeness, accuracy, or current applicability of any content. We disclaim all liability for actions taken or not taken in reliance on this article.