Security Title Endorsement Guide

FIRST LOSS ALTA 20-06 (06-17-06)

This endorsement is designed to alter the established criteria for determining when a loss is

recognized under a loan policy. Loss is normally the difference between the value of the

property with or without the defect, lien or encumbrance insured against. Under normal

circumstances, a loss would be difficult to determine until the land was sold after foreclosure. If

the sale was for an amount less than the debt, and the difference between the sales price and

the indebtedness was caused by a matter covered by the policy, the lender could claim a loss.

Consequently, an insured lender would normally be required to foreclose to prove this loss

before being able to make a claim. This endorsement, to be issued only when there is more

than one insured parcel, allows a loss to be recognized whenever a title defect materially

impairs the value of a parcel securing the loan without requiring acceleration of the debt and

foreclosure against any of the parcels securing the loan.

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