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Document - Stewart Title Virtual Underwriter BULLETIN
Stewart Title Guaranty Company
P. O. Box 2029
Houston, Texas 77252-2029
(800) 729-1902

Date: May 18, 1994
From: National Legal Department
To: All Issuing Offices in Alabama, Alaska, Arizona, Arkansas, California,
Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia,
Hawaii, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine,
Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri,
Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New
York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania,
Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont,
Virginia, Washington, West Virginia, Wisconsin, Wyoming
RE: Payoffs: Residential Open End or Revolving Credit Loans

Dear Associates:
Frequently, the seller/borrower has a revolving line of credit loan secured by
real estate.
The Problem: It is difficult to get a definite "final" payoff of this loan. This
is particularly true if the loan is tied to use of a credit card or checks.
Sometimes, the seller/borrower uses the credit card or checks after a payoff
statement and prior to the closing. Then, the payoff you receive is not correct.
To limit the risk, do the following if the seller/borrower has a prior revolving
credit loan.

  • Use the "Request to Cancel Revolving Credit Loan" (see referenced form
    below) with a payoff request. Each seller/borrower signs this. If more
    than one person can make draws on the loan, all must sign. Verify if more
    than one person has a credit card from the lender. The request tells the
    lender to cancel the revolving line of credit account. It requires a
    release or satisfaction. Send the letter at least two (2) weeks before
    closing. Require each seller/borrower to send all credit cards and checks
    to the lender for cancellation with the Request. If the mortgage has a
    procedure to cancel the advances, require compliance. Do not accept a
    payoff that is conditional (see form referenced below).
  • At closing, reconfirm the payoff.
  • Do same day payoff, (e.g., by wire) if possible.
  • Require the Affidavit by the seller/borrower. (See form referenced below)
  • If the lender will not give an unconditional payoff, require an escrow of
    the maximum credit line plus interest until the lender agrees to exchange
    a release for the payoff.

For specific information about the New York law, please see bulletin NY000039
Satisfaction of Credit Line Mortgages.

Bulletins Replaced: None.
Related Bulletins: NY000039 Satisfaction of Credit Line Mortgages.
Underwriting Manual:12.28 Mortgages.
Exceptions Manual:Mortgages.
Forms: STG Request to Cancel Revolving Credit Loan 1994;
STG Pay-Off Quotation 1994;
STG Revolving Credit Loan Affidavit and Personal Undertaking 1994.
© 1999, Stewart Title Guaranty, All rights reserved.