This article provides a template of the ALTA Interest Rate SWAP Endorsement – Direct Obligation – Defined Amount Endorsement. Contact us to learn more about this and other ALTA endorsements by requesting a copy of our free endorsement book.
INTEREST RATE SWAP ENDORSEMENT – DIRECT OBLIGATION – DEFINED AMOUNT ENDORSEMENT – ALTA 29.2-06 (Adopted 08/01/2011) (Technical Correction 04/02/2014)
- The insurance provided by this endorsement is subject to the exclusions in Section 3 of this endorsement, the Exclusions from Coverage in the Policy, the Exceptions from Coverage contained in Schedule B, and the Conditions. As used in this endorsement:
- “Date of Endorsement” is ____________________________.
- “Swap Obligation” means a monetary obligation under the interest rate exchange agreement dated , between and the Insured existing at Date of Endorsement and secured by the Insured Mortgage. The Swap Obligation is included as a part of the Indebtedness.
- “Additional Amount of Insurance” is $________________ that is in addition to the Amount of Insurance stated in Schedule A and is applicable only to loss or damage under this endorsement.
- The Company insures against loss or damage sustained by the Insured, not to exceed the Additional Amount of Insurance, by reason of the invalidity, unenforceability, or lack of priority of the lien of the Insured Mortgage as security for the repayment of the Swap Obligation at Date of Endorsement.
- This endorsement does not insure against loss or damage, and the Company will not pay costs, attorneys’ fees, or expenses that arise by reason of:
- rights or obligations set, created, or confirmed after the Date of Endorsement under a master interest rate exchange agreement existing on or after Date of Endorsement;
- the stay, rejection, or avoidance of the lien of the Insured Mortgage as security for the Swap Obligation, or a court order providing some other remedy, by the operation of federal bankruptcy, state insolvency, or similar creditors’ rights laws;
- the calculation of the amount, if any, determined by a court of competent jurisdiction as the amount of the Swap Obligation[; or]
- [the invalidity, unenforceability, or lack of priority of the lien of the Insured Mortgage as security for repayment of the Swap Obligation because all applicable mortgage recording or similar intangible taxes were not paid; or]
- [if Date of Endorsement is after Date of Policy, add any necessary additional exceptions here].
This endorsement is issued as part of the policy. Except as it expressly states, it does not (i) modify any of the terms and provisions of the policy, (ii) modify any prior endorsements, (iii) extend the Date of Policy, or (iv) increase the Amount of Insurance. To the extent a provision of the policy or a previous endorsement is inconsistent with an express provision of this endorsement, this endorsement controls. Otherwise, this endorsement is subject to all of the terms and provisions of the policy and of any prior endorsements.