The Secured Lender - April 2009

UCC insUranCe has, in many transaCtions, redUCed loan-origination Costs, inCreased lender and investor-transaCtion proteCtion (as well as transparenCy), eliminated UCC-related doCUmentation defeCts and filing errors, and shifted risk from oUtside CoUnsel with regard to the legal opinion.

prior liens in Puget Sound Financial, LLC vs. Unisearch, Inc. 146 Wn. 2d 428 (2002). Further, a defective description in collateral and incorrect filing jurisdiction led to a lender failing to properly perfect its security interest in Fleet National Bank vs. Whippany Venture I 370 B.R. 762 (d. Del 2004).

The exposure for lenders and outside counsel often takes form in the categories mentioned, with litigation and loss of collateral supporting the case for UCC insurance. Other cases generally fitting into these categories include:

In re Knudson, 929 F.2d 1280 (8th circuit 1991), District of Columbia vs. Thomas Funding, 15 UCC Rep Serv 2d 242 (D.C.), First National Bank of Lacon vs. Strong (663 N.E. 2d 432 Ill. App 3d 1996), ITT Commercial Finance Corp vs. Bank of the West (166 F.3d 195 5th Cir 1999), LaSelle’s Bicycle World (120 B.R. 579 Bankr. N.D. Okla 1990), In re Matter of Ellingson Motors (139 B.R. 919 Bankr . D. Neb 1991), Franklin National Bank vs. Boser (972 S. W. 2d 98 Tex App. 1998), Avalon Software, Inc. (209 B.R. 517 D. Ariz. 1997); In re: Isringhausen ( 20 UCC Rep Serv. 2d 366 Bankr S.D. Ill. 1993), Banque Worms vs. Davis construction Co, Inc. 831 S. W. 2d 921 (Ky. Ct. App 1992), In re Nenko, Inc. 209 B.R. 588 (Bankr E.D. NY 1997), Schaheen vs. Allstate Financial Corp., 17 UCC Rep. Serv. 2d 1309 (4th Cir. 1992), and Mellon Bank, N. A. vs. Metro Communications, Inc. 945 F.2d 635 (3rd Cir 1991).

quality utilizing UCC insurance, which is positioned to provide for reduced loan loss reserves and, in turn, lead to lower regulatory capital requirements. This provides for increased liquidity and bank operating margins. TSL

Ted Sprink is senior vice president and national marketing director for the UCC Risk Management Program of the Fidelity National Financial Family of Companies. UCCPlus insurance policies are centrally underwritten and produced by Chicago Title, Fidelity National Title and Ticor Title insurance companies, collectively a leading Fortune 500 provider of loan-origination and closing services. Fidelity National Financial purchased in December 2008 the Lawyers Title and Commonwealth Title insurance brands from LandAmerica Financial Group.

UCC Insurance Today for Credit Quality and Liquidity

UCC insurance has, in many transactions, reduced loan-origination costs, increased lender and investor-transaction protection (as well as transparency), eliminated UCC-related documentation defects and filing errors, and shifted risk from outside counsel with regard to the legal opinion. UCC insurance has further served to enhance the strength and value of loans and loan portfolios securitized or otherwise sold into the secondary market.