19.5.9.6 Title Evidence at Final Endorsement

A. Prior to Final Endorsement, FHA Lender must present to HUD a new title insurance policy or a datedown title endorsement (such endorsement or policy must be submitted as a pro forma for HUD’s review prior to Final Closing). Any endorsement package must extend title insurance coverage to the date of the Final Endorsement of the Note and assure continuing first-lien priority of the Security Instrument. The

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Chapter 19 Closing Guide 19.5 Additional Requirements for Insurance of Advances

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required title evidence must be delivered to Lender, with a duplicate original and one copy delivered to the HUD Closing Attorney. The required title evidence must do the following:

1. Show what, if any, matters have been recorded against title to the insured property since Initial Closing; copies of such items must be submitted to HUD for review prior to Final Closing. The RC Director and HUD Closing Attorney will review any exception to title not shown in the Title Policy accepted at Initial Closing to determine whether it affects the value, marketability, or insurability of the Loan. Any new title exception that is deemed unacceptable by the RC Director must be extinguished as a matter of record and removed from the title insurance policy, or its effect insured over through affirmative title coverage (notation, endorsement, etc.) acceptable to the RC Director;

2. Bring the effective date of the title policy forward to the day of Final Endorsement;

3. List any modification agreement or supplementary Loan documents on Schedule A of the title policy and insure the full amount of the FHA-insured Loan, inclusive of amounts secured by the Security Instrument and any supplements and/or modifications, in first lien position. Should the title insurance company be unable to provide such endorsement, or should the endorsement show any lien intervening between the original FHA-insured Security Instrument and the Supplemental Security Instrument, HUD will not endorse the Note for insurance at the increased amount;

4. Delete or amend any other matters covered by the initial title insurance policy, as appropriate, such as updating the exception for unpaid property taxes and deleting the pending disbursements clause; and

5. Adjust the amount of title policy coverage, if the mortgage Loan amount has changed.