Title: ENDORSEMENT
Author: Roger Therien

State: California

Endorsement No. 249	Date: November 1, 1998
Last Dollar

Subject:

When a lender's policy is issued for an amount less than the indebtedness secured by the insured mortgage, this Endorsement provides that coverage will not be reduced by principal payments until after the indebtedness has been reduced to the amount of insurance. This Endorsement is intended to be issued with a loan policy.

Requirements for Issuance:

Approval of Branch Counsel or Regional Underwriting Personnel is required in order to issue this Endorsement.

In cases where a loan policy is issued for less than the amount of the indebtedness secured by the insured mortgage, the insured may also request a modification of Conditions and Stipulations Section 9(b) of the 1992 ALTA Loan or Leasehold Loan Policy or the CLTA Standard Coverage Loan Policy-1990 which read, in relevant part,

“Payment in part by any person of the principal of the indebtedness, or any other obligation secured by the insured mortgage, or any voluntary partial satisfaction or release of the insured mortgage, to the extent of the payment, satisfaction or release, shall reduce the amount of insurance pro tanto . . .”

The basis for the modification is that the lender does not want a reduction in the amount of insurance as mortgage payments are made on the value of security other than the land described in the policy. Instead, such a lender wants the insurance to remain for the full amount shown in Schedule A until the “last dollar” is paid on the loan.

Although there is no provision in the 1970 ALTA Loan or Leasehold Loan Policy which is comparable to the above-quoted Section 9(b) of the 1992 version, issuance of this “Last Dollar” coverage is sometimes requested in connection with a 1970 policy. While the issuing guidelines are identical, preparation of the endorsement in such instance will require the deletion of the prefatory clause which reads:

“Notwithstanding Section 9(b) of the Conditions and Stipulations to the contrary . . .”

thus commencing the coverage paragraph as follows: “By the issuance of this policy . . .”