An Exploration of Loan Features
Comparing CLTA and the ALTA Standard
Obtaining robust and extensive title insurance coverage is the most desirable outcome in most cases. But what happens when you’ve been expecting a policy with extensive coverage only to hear just before closing that the coverage will be something different, something less extensive? Under what circumstances should you push back and demand what you expected? […]
ALTA 2021 vs. ALTA 2006: Important Changes for Lenders
The American Land Title Association (ALTA) updated the loan policy and various endorsements from their 2006 versions in bits and pieces over the intervening period. These changed in 2021, and the revised policies and endorsements began rolling out in earnest in 2022 and intend to be the only policies available starting in January 2023. The […]
Variable Interest – Volatility Under Control
In the recent economic environment of rising rates and inflation, fixed interest rate loans, which are simple, easy to calculate, and provide a predictable future income stream, can result in diminishing returns to the lender in the form of opportunity costs, reduced purchasing power of the money paid, and lower margins compared against a lender’s […]
Lending, Brokering, or Servicing Licensing Requirements and their Exceptions
Thankfully, only a handful of states require a license to lend or to broker or service a loan, but when a license is required, strict compliance is absolutely essential. Failure to comply can result in being prohibited from lending, brokering, or servicing in that state, a significant penalty. This article will explain general licensing applicability, common exceptions, […]
Understanding Prepayment Penalties
Prepayment penalties, or “prepayment premiums” as we prefer to call them, are the charging of a fee in lieu of interest that would have otherwise been collected if the loan had not been paid of prior to a certain date. Lenders expect to receive interest income from the monthly payments on any given loan, and […]
Staying Under the Limit: Exploring Usury
Usury is a term that refers to the law that sets a maximum interest rate on certain loans in a given state. These laws vary tremendously from state to state, including some which have no limits, at least with respect to business-purpose loans. Naturally, a state wishes to balance the needs of lenders to charge […]
Signing Authority: Why Should I Care? Doesn’t Title Insurance Cover Me Anyway?
Who is signing your loan documents? Does it matter? We hope you have an answer to the first question. The answer to the second question is a resounding YES. Failure to have the proper signers for the loan documents can result in unenforceable loan documents and lack of security for the money that has gone […]
Which is Right for My Loan Doc: Corrective Addendum or Modification Agreement?
There are two ways to affect a change to the loan documents after they have been executed and the loan has been closed: a corrective addendum or a modification agreement. Each serves a unique purpose and requires careful consideration before making the choice. When would I choose one over the other? The proper use of […]
Unavailable Endorsements: State Regulation and Title Company Stubbornness
A title policy’s coverage only goes so far. To expand coverage lenders often choose to obtain several endorsements to the policy to cover certain issues. These range from the typical endorsements requested on every loan transaction, to the uncommon ones that are specific to a unique issue in the transaction or upon the real estate. […]