4702.2: Title insurance policy requirements (03/02/16)

Each title insurance policy must meet the following minimum requirements:

(a)Title insurer

The title insurance policy must be written by a title insurer legally able to do business in the jurisdiction where the Mortgaged Premises are located.The policy must be fully enforceable and protective of the mortgagee's rights and comply with all other requirements of this section.If a preliminary binder or commitment is issued, it must be issued by the same title insurer that issues the final title insurance policy.Selection or acceptance of the title insurance company by the Seller must be based solely on considerations, such as the comprehensiveness of the policy, the financial ability of the company to stand behind its commitment, the company's record on settling claims and other considerations normally employed by institutional investors originating or purchasing Mortgages in the jurisdiction where the Mortgaged Premises are located. The selection or acceptance must not be based on receipt of any fee or other consideration by the Seller or its employees, officers or directors.

(b)Amount of protection

The title insurance policy must protect the mortgagee up to at least the current principal balance of the Mortgage.

(c)Insured

The title insurance protection must run to Freddie Mac for Mortgages purchased in their entirety by Freddie Mac.If a Mortgage is registered with MERS®and is originated naming MERS as original mortgagee of record, solely as nominee for the Lender named in the Security Instrument and the Note, and Lender's successors and assigns, then the "insured Mortgage" covered by the title insurance policy must be identified in the title insurance policy as the Security Instrument given to MERS, solely as nominee for Lender and Lender's successors and assigns. However, under no circumstances may MERS be named as an insured in a title insurance policy.Furthermore, if a Mortgage is registered with MERS, the Seller/Servicer must arrange for all insurance drafts, notices, policies, invoices, etc., to be delivered directly to the Seller/Servicer. Although the MERS address appears in local public land records, the address for MERS must not be given to organizations that normally direct mail to the Seller/Servicer or Servicing Agent.

(d)Form

The title insurance policy must be written on:

Effective for Mortgages with Note Dates on or after January 1, 2008, in those States where their use is permitted, either:
- The American Land Title Association (ALTA) 2006 Loan Policy (adopted 6/17/06), or
- The ALTA Short Form Residential Loan Policy One-To-Four Family (adopted 6/17/06)
For all other Mortgages, one of the following:
- The ALTA 1992 Loan Policy (revised 10/17/92)
- The ALTA Short Form Residential Loan Policy One- to Four-Family (adopted 10/21/00)
- The ALTA Short Form Expanded Coverage Residential Loan Policy One- to Four-Family (adopted 10/22/03)

Sellers may use a title insurance policy written on a form other than one of the ALTA insurance policy forms described above, provided the Seller warrants that the coverage the policy provides is at least as broad as the coverage provided by the ALTA 2006 Loan Policy.

Regardless of the title insurance policy form used, the following endorsements must be attached to or, where applicable, incorporated by reference into the policy. When using the ALTA 2006 Loan Policy, the Seller must use the 2006 version of the applicable endorsement form (with the endorsement form number followed by -06 (6/17/06)):

An ALTA Form 8.1, Environmental Protection Lien Endorsement. Form 8.1 may make an exception only for specific State statutes that provide for possible subsequent "superliens" that could take priority over the Mortgage
For all ARMs, the appropriate ALTA form for Variable Rate Mortgages (ALTA Form 6, Variable Rate Mortgage; ALTA Form 6.1, Variable Rate Mortgage — regulations; or ALTA Form 6.2, Variable Rate Mortgage — Negative Amortization)
An ALTA Form 4 endorsement or its equivalent for each Condominium Unit Mortgage
An ALTA Form 5 endorsement or its equivalent for each Mortgage secured by a Planned Unit Development (PUD) unit
An ALTA Form 13.1 endorsement or its equivalent for all leasehold Mortgages. The title insurance policy must include as part of the insured estate, the value of the lessee's leasehold improvements.
An ALTA Form 7.1 endorsement in States where available, or Form 7 endorsement in other States, or its equivalent for each Mortgage secured by a Manufactured Home. The title policy must identify the Manufactured Home located on the land and insure against any loss if the Manufactured Home is not real property.
An ALTA Form 9 endorsement or its equivalent meeting the requirements of Section 4702.4(d)(3rdbullet) for each Mortgage secured by property subject to a restrictive agreement or restrictive covenant

A Seller may accept evidence of title insurance under a master title insurance policy for any Home Mortgage. Any Seller that accepts evidence of title insurance under a master title insurance policy represents and warrants as follows:

The Seller has reviewed the title insurer's master policy documents, including the certificate of title insurance or short-form title policy, the master policy with all endorsements and any other applicable documents, and, based on this review and on certifications from the title insurer, the Seller has confirmed that the master policy provides at least the amount and scope of coverage given by the ALTA 2006 Loan Policy and that the master policy otherwise meets the requirements of this Section 4702.2
The Seller has obtained from the title insurer a fully executed master title insurance policy issued in the Seller's name as insured. If the Mortgage is purchased in its entirety by Freddie Mac, the Seller will assign to Freddie Mac its rights in the policy to the extent of the Mortgage purchased. For Mortgages in which Freddie Mac has purchased a participation interest, the Seller does not need to assign its rights in the policy.
The master policy has been approved by the applicable State or local authority where such approval is required
The insurer will replace the title insurance certificate with a full individual ALTA or similar policy upon 10 days' notice by Freddie Mac

Freddie Mac may refuse to accept the master title insurance policy of any title insurer.

(e)Survey requirements

If the title company insuring the Mortgage or the attorney rendering the opinion of title requires a survey to remove exceptions to survey matters, the Seller must provide a survey of the Mortgaged Premises. The survey provided must conform to:

The title insurance company's or attorney's standards, and
Any applicable legal standards relating to surveys

(f)Exceptions

When the title insurance policy takes exception to survey matters, other than those permitted under Section 4702.4, the Seller must provide whatever information is required by the title insurance company to either remove the exception or obtain an endorsement providing the insurance required. If the title company will not issue a policy without a survey exception, Freddie Mac will not purchase the Mortgage. In addition, the title policy must not be subject to any title exceptions other than those permitted under Section 4702.4.