TITLE 13 INSURANCE
CHAPTER 14 TITLE INSURANCE
PART 7 LOAN POLICIES
13.14.7.1 ISSUING AGENCY:
Office of
Superintendent of Insurance (OSI).
[13.14.7.1 NMAC – Rp, 13.14.7.1 NMAC,
1/1/2021]
13.14.7.2 SCOPE: This rule applies to all title
insurers, all title insurance agencies, and all title insurance agents
conducting title insurance business in New Mexico.
[13.14.7.2 NMAC – Rp, 13.14.7.2 NMAC,
1/1/2021]
13.14.7.3 STATUTORY AUTHORITY: Sections
59A-2-8, 59A-2-9, 59A-30-4, 59A-30-6, 59A-30-6.1, 59A-30-6.2 and 59A-30-8 NMSA
1978.
[13.14.7.3 NMAC – Rp, 13.14.7.3 NMAC,
1/1/2021]
13.14.7.4 DURATION: Permanent.
[13.14.7.4 NMAC – Rp, 13.14.7.4 NMAC,
1/1/2021]
13.14.7.5 EFFECTIVE DATE:
January 1,
2021, unless a later date is cited at the end of a section.
[13.14.7.5 NMAC – Rp, 13.14.7.5 NMAC,
1/1/2021]
13.14.7.6 OBJECTIVE: The purpose of this rule is to
establish requirements for loan policies.
[13.14.7.6 NMAC – Rp, 13.14.7.6 NMAC,
1/1/2021]
13.14.7.7 DEFINITIONS: See 13.14.1 NMAC.
[13.14.7.7 NMAC – Rp, 13.14.7.7 NMAC,
1/1/2021]
13.14.7.8 LOAN POLICIES:
A. A
loan policy shall be issued for the face amount of the loan
or loans insured. When the land covered in the policy represents only part of
the security of the loan(s), the policy shall be written in the amount of the
value of such land or the amount of the loan(s) insured, whichever is less.
When requested by an insured, a loan policy may be issued in an amount equal to
the original principal amount of the indebtedness plus interest (capitalized or
otherwise) not to exceed twenty percent of the principal amount.
B. A
loan policy may insure liens on multiple tracts in the same manner as an
owner’s policy.
C. A
title insurer or title insurance agency issuing a loan policy shall deliver the
new owner’s(s) NM form 9, containing all of the
required information available at that time and shall ask the owner’s(s) to
indicate whether an owner’s policy is declined. The title insurer or title
insurance agency shall retain a copy of the completed NM form 9 with a copy of
the loan policy for at least two years whenever an owner’s policy is declined.
D. Unless
otherwise provided in these rules, a loan policy with a leasehold loan
endorsement shall contain the same standard exceptions, be subject to the same
premium and be subject to deletion of the same standard exceptions as a
standard loan policy. A leasehold loan endorsement shall be attached to a loan
policy to create a loan policy insuring a leasehold estate.
[13.14.7.8 NMAC
– Rp, 13.14.7.8 NMAC, 1/1/2021; A/E, 1/24/2024; N, 07/16/2024]
13.14.7.9 [RESERVED]
[13.14.7.9 NMAC – Rn, 13 NMAC 14.7.9,
5/15/2000; A, 3/1/2002, Repealed, 1/1/2021]
13.14.7.10 STANDARD EXCEPTIONS:
A loan policy
shall contain standard exceptions 1 through 7 except as otherwise provided by
these rules.
[13.14.7.10 NMAC – Rp, 13.14.7.10
NMAC, 1/1/2021]
13.14.7.11 [RESERVED]
[13.14.7.11 NMAC – Rn, 13 NMAC
14.7.9, 5/15/2000; A, 10/1/2012, Repealed, 1/1/2021]
13.14.7.12 [RESERVED]
[13.14.7.12 NMAC – Rn, 13 NMAC
14.7.12, 5/15/2000; A, 10/1/2012, Repealed, 1/1/2021]
13.14.7.13 [RESERVED]
[13.14.7.13 NMAC – Rn, 13 NMAC
14.7.13, 5/15/2000; A, 10/1/2012, Repealed, 1/1/2021]
13.14.7.14 [RESERVED]
[13.14.7.14 NMAC – Rn, 13 NMAC
14.7.14, 5/15/2000; A, 10/1/2012, A, 7/31/2014, A, 3/1/2016, Repealed, 1/1/2021
13.14.7.15 [RESERVED]
[13.14.7.15 NMAC – Rn, 13 NMAC 14.7.15,
5/15/2000; A, 10/1/2012, Repealed, 1/1/2021]
13.14.7.16 POLICY INSURING A CONSTRUCTION LOAN
- PENDING DISBURSEMENT CLAUSE:
A. When
a title insurer or agency issues a loan policy insuring a construction loan
mortgage, the title insurer may require a specific pending disbursement clause.
Such clause may be in the form directed by the title insurer, or it may be in
the following form: “Pending disbursement of the full proceeds of the loan
secured by the mortgage or deed of trust set forth under schedule A hereof,
this policy insures only to the extent of the amount actually disbursed but
increases as each disbursement is made, in good faith, and without knowledge of
any defect in, or objections to, the title, up to the face amount of the
policy.” Prior to each disbursement of the loan proceeds, the title shall be
down dated for possible liens or objections intervening between the date hereof
and the date of such disbursement.
B. At
the time of each disbursement, NM form 22 may be issued showing any changes in
title to the insured property and stating the total amount of the proceeds of
the construction loan advanced by the lender at the date the endorsement is
issued.
[13.14.7.16 NMAC – N, 1/1/2021]
13.14.7.17 REPLACING LOAN POLICY UPON
RECEIVERSHIP: Issuance of a replacement loan policy shall be
governed by the rules applicable to a replacement owner’s policy, except that a
title insurer or agency shall accept as evidence either a replacement loan
policy or a loan policy of an insurer under receivership, or a copy of the
same, for purposes of providing any applicable discount.
13.14.7.17 NMAC – N, 1/1/2021]
13.14.7.18 LIMITED
PRE-FORECLOSURE TITLE INSURANCE POLICY: NM form 41 and,
if desired, NM form 42 may be issued upon receipt of an order in anticipation
of the filing of an action to judicially foreclose a mortgage, or other lien or
security instrument encumbering title, or to non-judicially foreclose a deed of
trust. No commitment shall be issued in connection with the policy. The amount
of coverage shall be equal to the unpaid principal indebtedness due under the
lien or note secured by the security instrument to be foreclosed. The policy
shall be furnished solely for the purpose of facilitating the foreclosure.
[13.14.7.18 NMAC – Rp, 13.14.7.22
NMAC, 1/1/2021]
13.14.7.19 RESIDENTIAL LIMITED COVERAGE JUNIOR LOAN
POLICY: A title insurer or title
insurance agency may, issue NM
form 45 if all of the following conditions exist:
A. the
real property to be insured is one to four family residential property;
B. the
real property is located within an approved and recorded subdivision;
C. the
title insurance agency or title insurer has a complete copy of the loan policy
issued to an insured senior lender before the commencement of the title search;
and
D. the
loan is less than or equal to $125,000.
[13.14.7.19 NMAC – N, 1/1/2021]
13.14.7.20 [RESERVED]
[13.14.7.20 NMAC - Rn, 13 NMAC 14.7.20, 5/15/2000; A,
3/1/2016, Repealed 1/1/2021]
13.14.7.21 RESIDENTIAL LIMITED COVERAGE MORTGAGE MODIFICATION
POLICY:
A title insurer or title insurance agency may issue NM form 90 if all of the following conditions exist:
A. the amount of
the policy shall not exceed the outstanding principal balance of the loan on
the date of the policy;
B. the policy shall
not increase the amount of coverage under the prior policy;
C. the real
property to be insured is one to four family residential property; and
D. the
title insurer or title insurance agent has a complete copy of the prior loan
policy before the commencement of the title search.
[13.14.7.21 NMAC – Rp, 13.14.7.27
NMAC, 1/1/2021]
13.14.7.22 [RESERVED]
[13.14.7.22 NMAC - Rn, 13 NMAC 14.7.22, 5/15/2000; A, 7/1/2004;
A, 9/15/2010; A, 3/1/2016; A, 7/1/2018, Repealed 1/1/2021]
13.14.7.23 [RESERVED]
[13.14.7.23 NMAC - Rn, 13 NMAC
14.7.23, 5/15/2000, Repealed 1/1/2021]
13.14.7.24 [RESERVED]
[13.14.7.24 NMAC - N, 7/1/2004; Repealed, 9/15/2009
13.14.7.25 [RESERVED]
[13.14.7.25 NMAC - N, 7/1/2004; A, 7/1/2005; Repealed,
9/15/2009]
13.14.7.26 [RESERVED]
[13.14.7.26 NMAC - N, 9/15/2010; A, 10/1/2012; A,
3/1/2016, Repealed 1/1/2021]
HISTORY OF 13.14.7
NMAC:
Pre-NMAC History.
ID 74-1, Article 10, Chapter 58, Rule
2, Regulations for Filing Title Insurance Forms and Rates, filed 3/7/1974.
SCC-85-6, Insurance Department Regulation 30 - Title
Insurance, filed 9/6/1985.
SCC-86-1, Insurance Department Regulation 30 - Title
Insurance, filed 5/9/1986.
History of Repealed Material. 13.14.7 NMAC, Loan, Leasehold Loan,
and Construction Loan Policies, (filed 5/15/2000), was repealed and replaced by
13.14.1 NMAC, Loan Policies effective 1/1/2021.
Other History.
Re-promulgated a portion of SCC-86-1, Insurance Department
Regulation 30 - Title Insurance (filed 5/9/1986) and renumbered, reformatted
and replaced as 13 NMAC 14.7, Loan, Leasehold Loan, and Construction Loan
Policies, effective 11/01/1996.
13 NMAC 14.7, Loan, Leasehold Loan, and Construction Loan
Policies (filed 10/2/1996), was renumbered reformatted, amended and replaced by
13.14.7 NMAC, Loan, Leasehold Loan, and Construction Loan Policies, effective
5/15/2000, amended effective 7/31/2014.
13 NMAC 14.7, Loan, Leasehold Loan, and Construction Loan
Policies effective 7/31/2014, amended effective 3/1/2016.
13.14.7 NMAC, Loan, Leasehold Loan, and Construction Loan
Policies effective 3/1/2016, amended effective 7/1/2018.
Justification:
The purpose of the change is to make the rule consistent with the promulgated
NM Form 2, Loan
13.14.7
NMAC, Loan, Leasehold
Loan, and Construction Loan Policies, filed 5/15/2000, was repealed and
replaced by 13.14.7 NMAC, Loan Policies, effective 1/1/2021.
13.14.7
NMAC, Loan, Leasehold
Loan, and Construction Loan Policies, effective 1/1/2021, was amended effective
1/24/2024 to delete former Subsections D and E of 13.14.7.8 NMAC, which
addressed NM Form 63, which has been withdrawn.