A schedule of title insurance rates for
the state in which you are located can be found inside the back cover pouch of
this manual. The premium is
calculated on the basis of a set charge per thousand dollars of consideration
stated. In a typical simultaneous
transaction where the purchase price exceeds the mortgage amount, the premium is
calculated by determining the amount due on the owner's policy and then adding a
nominal charge (typically, $100.00) for the simultaneous issuance of the loan
the event that you are issuing an owner's policy together with two loan policies
on a particular parcel of land, the premium should be calculated in the same
fashion. However, you should
include a second simultaneous fee for the second mortgagee’s loan policy.
the event that the two mortgages in the aggregate exceed the amount of the
owner's policy, the premium should be calculated in the exact same fashion.
However, you should also include an additional premium for the amount by
which the combined loan exceeds the owner's policy.
An example is as follows.
purchases property for $500,000.00. "A"
gives a mortgage to bank "B" in the amount of $400,000.00.
"A" then gives a second mortgage to bank "C" in the
amount of $200,000.00. The premium
would be calculated as follows. The
rate for a $500,000.00 owner's policy, combined with a simultaneous fee charge
for the first mortgage, combined with a simultaneous fee for the second mortgage
policy, combined with the premium for a $100,000.00 loan policy.
This $100,000.00 loan policy represents the amount by which the aggregate
of the loans exceeds the owner's policy (i.e.
$400,000.00 plus $200,000.00 minus $500,000.00).
you are only insuring one mortgage which actually exceeds the owner's policy
amount, the same analysis should be applied to calculate the rate.
In other words, figure out the premium due on the owner's policy and
combine it with the simultaneous charge and the premium due for the amount by
which the loan amount exceeds the owner's coverage.
are occasions when special rates can be given based on a reissue or a refinance
transaction. Typically, if you are
refinancing a mortgage with the same lender within a one-year period for the
same amount or a lower amount, there will be a discount.
In the event the new mortgage exceeds the amount of the old mortgage,
there will be a discount, plus an additional premium calculated on the amount by
which the new mortgage exceeds the old. If
you have any questions concerning these transactions, you should contact the
determining the amount of the policy, the following guidelines should be
followed. The face amount of a loan
policy must be in an amount at least equal to the amount of the mortgage being
insured. The face amount of the
policy can actually exceed the mortgage amount by up to 25%.
This is somewhat typical in a situation insuring a negative amortization
owner's policy amount must be for the fair market value of the land.
This is typically calculated by the purchase price in an arm's length
transaction. In the event that there has been no arm's length transaction
in the recent past, an appraisal must be obtained for the property to ascertain
an accurate amount for an owner's policy. This
condition, however, can be waived in the event that the local office determines
that the amount in question is not unusually high or low based upon the existing
history of real estate transactions in that particular locale.
the event that a particular transaction involves multiple parcels located in
different counties, it may become necessary to issue several policies all in the
full face amount of the consideration or mortgage amount.
These policies would contain cross-liability language which would
indicate that the aggregate liability of the company will not exceed the face
amount of any one policy. Under
these circumstances, the premium charge should be calculated on the face amount
of the mortgage. It should not be
calculated based on the aggregate amount of all of the policies.
Since the company's exposure is only the full face amount of the
mortgage, that is the amount on which the premium should be calculated.
Please see the underwriting section for "Multiple Parcels" for
further explanation and language.
In several states in the Northeast, the rates are regulated by the various state insurance departments. There are several kinds of regulation. Some states set a maximum rate and allow title insurance companies to charge anything below that amount. Other states set a minimum rate and preclude underwriters from charging less than the filed amount. Still other states establish the exact rate for insurance and allow for no deviations either above or below that amount. At present, Massachusetts is not regulated and affords a large degree of latitude to the underwriters in determining and establishing title insurance rates. If you have a particular situation or transaction which you feel warrants special attention or consideration, please do not hesitate to contact the local office.