UNDERWRITING MEMO
For all purchase transactions, Iowa Title Guaranty Commitments include the following Additional Requirement on Schedule B-Part I:
You must make sure that your mortgage will meet the definition of a Purchase Money Mortgage as defined by Iowa Code Section 654.12B, including a statement on the mortgage that it is a Purchase Money Mortgage.
Iowa Code § 654.12B provides that a lien created by a recorded purchase money mortgage shall have priority over and is senior to preexisting judgments against the buyer. However, in order to be entitled to the rights provided by Iowa Code § 654.12B the mortgage must contain a recital that it is a purchase money mortgage.
Iowa Title Guaranty has found that a number of purported purchase money mortgages do not meet the requirements of Iowa Code § 654.12B. Specifically these mortgages do not include a statement on the mortgage that it is a "Purchase Money Mortgage." This trend is especially evident when preprinted forms are being provided by the lender.
In the event a mortgage fails to include a recital that it is a "Purchase Money Mortgage" the Commitment requirement noted above is not satisfied. Therefore, a Certificate may not be issued without underwriting approval.
Please contact an Iowa Title Guaranty underwriter at (515) 725-4357 if you have any questions or for more information
