EAGLE Protection: The Next Generation of Coverage

This spring, First American Title Insurance Company announced new policy forms for owners and lenders, which it calls its "EAGLE Policy." The EAGLE policy is designed for insuring residential properties only.

In addition to risks covered by standard and extended title insurance policy forms, the EAGLE owner's policy provides for enhanced coverage by increasing the original policy amount at the rate of 5% for each policy year to a maximum of 125% of the original amount. The policy also provides coverage for such additional risks as post-policy forgeries against the insured interest; forced removal of residential improvements due to lack of an appropriate building permit (subject to deductible); attempted enforcement of restrictions based on violations created by prior owners (subject to deductible); post-policy construction of improvements by a neighbor onto insured land; violation as of the policy date of an existing subdivision law (subject to deductible); damage to residential structures from extraction or development of minerals; and location and dimensions of land.

The EAGLE policy provides additional coverage for a lender by increasing the policy amount, at the time the policy is issued, to 125% of the amount shown on Schedule A (usually the original loan amount). In addition, the EAGLE loan policy provides coverage for such risks as most mechanics' lien claims; invalidity or unenforceability of the insured mortgage based on violation of usury laws; location and dimensions of land; correctness of street address; failure of the land to contain a residence or condominium as of the policy date; failure of land to be zoned for residential use; failure of land to have been legally subdivided; failure of a residential structure to have been constructed with appropriate building permits; matters affecting title that would have been disclosed by an accurate survey; inability to use existing residential structure because of violation of a restriction; encroachment onto the insured land of a neighbor's improvement; damage to improvements as the result of post-policy extraction or development of minerals; post-policy forgery against the insured interest; and invalidity, unenforceability or lack of priority of the insured mortgage following certain post-policy advances or loan modifications.

Availability of the EAGLE policy may vary according to locality, and some of the coverages mentioned above may be modified in some areas, but the Company is making a strong commitment to see that this new policy form achieves the widest possible availability and use.

For further information, contact your local First American representative.

The "Year 2000 Problem"

Here comes the year 2000: You got a problem with that?

Many computer systems do.

20 or 30 years ago, computer programmers seeking to conserve time and system resources adopted a standard for handling dates whereby the year was represented by two digits instead of four. Using this standard, any two digits will automatically be preceded by "19." For example, "97" becomes 1997.

Many computer programs developed with this standard remain in use today. The problem is that these programs won't work in the 21st century. The year 2000 will become 1900.

This presents a host of potential difficulties, not the least of which is misdated data. Deadlines may be missed or erroneously reported. Interest and amortization schedules may be miscalculated. If a bank uses a computer system to open its vaults every Monday at 8:00 a.m., the vaults might open automatically on January 8, 2000 (a Saturday) because the computer thinks its January 8, 1900 (a Monday).

This is a serious problem. Many of these programs cannot be reprogrammed and will have to be replaced. According to a recent article in the magazine Independent Banker, fixing the problem is estimated to cost hundreds of billions of dollars worldwide and millions for individual companies. Recent articles in the Los Angeles Times report that the IRS needs at least $129,000,000 to reprogram its computers, while the state of Nebraska estimates $32,000,000, and California more than $50,000,000. And even now few companies or government agencies plagued with the problem have a plan to resolve it.

Now is the time for anyone operating or relying on a computer system to carefully analyze whether, and how, they might be affected by the "year 2000 problem." It may be later (or is it earlier?) than you think.

Updated Electronic Underwriting Library

First American's Electronic Underwriting Library is about to be re-released as version 3.5, Internet Enabled. This update of the Underwriting Library is packed with new material, including updates for the state-by-state guide, new endorsements and updates to more than 200 other endorsements. Many articles have been added covering current topics, such as "Off-Balance-Sheet Financing- Synthetic Real Estate," and "What Mortgage Bankers Should Know About Title Insurance." Several state-specific manuals have also been added. One of the most innovative aspects of this new version of the Underwriting Library is the CD-ROM hybrid format which adds internet linking capability. From over 50 sites in the Library, a user can double click on a link and go directly to an Internet site, such as the First American Title Home Page, several different state and county home pages, and from those sites the user can also go to any site on the Internet. A user can also go to the Internet version of the Underwriting Library to check for updates.

Users will see a whole new look at the Underwriting Library. The CD-ROM jacket and the CD-ROM itself have a new design which matches the presentation box sleeve. The Quick Reference Card, giving a summary of keys and features of the Library, is also available.

Table of Contents | Previous Story | Next Story