EX-99.2 3 exh99-2.htm STEWART TITLE GUARANTY CORPORATION HOA DISCREPANCY REVIEW

Exhibit 99.2 

 

EXECUTION VERSION

 

 

August 27, 2019

Stewart Title Guaranty Company

1980 Post Oak Blvd.

Houston, TX 77056

RE:Home Partners of America 2019-2 SFR Securitization HOA Discrepancy Review

Ladies and Gentlemen:

In connection with the offering (the “Offering”) of the Securities by the Issuer referenced above, we have conducted the HOA Discrepancy Review further described below. The Review was conducted in accordance with what we believe to be customary residential title practice and was intended to assist in resolving certain discrepancies regarding whether specified properties may be subject to an active homeowner’s, condominium, or other common-interest community association (each an “HOA”) as of the date set forth below. A more detailed description of services performed and of our findings and conclusions is set forth below. The description below is intended to satisfy the disclosure requirements of Items 4 and 5 of FORM ABS DUE DILIGENCE-15E, which certification has been provided to you concurrently herewith.

I.Manner and Scope of Review (Item 4 of Form ABS Due Diligence-15E)
a.Background.

We have been informed that:

1.The Securities are to be secured by, among other things, certain mortgage loans (the “Mortgage Loans”) relating to certain residential rental properties (the “Properties”).
2.Some of the Properties were previously designated by Borrower as not being subject to an HOA (“Non-HOA Properties”).
3.Based upon a review of the Properties conducted by a third party, certain discrepancies may have been identified suggesting that certain of the Non-HOA Properties may in fact be subject to an HOA and/or an HOA Discrepancy Review for certain properties was deemed appropriate by the Borrower.
b.Properties Subject to Review. [(1 ) through (3) of Item 4.]

The Borrower and/or Borrower’s agent provided us with a list of properties with respect to which we were requested to perform our HOA Discrepancy Review (the “Subject Properties”). The list of Subject Properties is attached hereto as Schedule I.

 

 

 

c.How the Review Was Conducted. [(4) of Item 4]

 

We applied what we believe to be customary residential title practice to locate evidence that a Subject Property may be subject to an active HOA. We and/or our third-party vendor(s) employ a variety of customary searching methods, the most salient of which are described below, that are reasonably designed to reveal evidence regarding the existence of an active HOA (the “HOA Discrepancy Review”). Every property is unique, and not every search method is employed with respect to each Subject Property. These methods are intended to allow us to reach a reasonable judgment regarding the likely existence of an active HOA. However, for a variety of reasons, including the reasons described below under “Limitations of Searching Methods,” it is not possible to determine with absolute certainty that no active HOA exists with respect to the Subject Properties.

Customary Searching Methods. Set forth below are certain customary inquiries which we and our third party vendor(s) employ to locate evidence that an active HOA may exist. As noted, not all of these methods are used for every Subject Property.

1.Review of DCCR. In some instances, inquiry is made regarding whether the property is subject to any Declaration of Covenants, Conditions and Restriction (“DCCR”) or similar documentation. Where a DCCR does exist, it may be examined to ascertain whether the creation of an HOA was contemplated.
2.Review of state registrations. A search of appropriate state records is sometimes conducted to ascertain whether an HOA has been registered as may be required by applicable law.
3.Internet searches. Standard search engines may be used to search the internet for evidence of an active HOA.
4.Review of prior mortgages. Certain mortgages to which the Subject Property was previously subject may be reviewed, in order to ascertain whether a rider had been attached which would indicate that the Subject Property is part of a Planned Unit Development. This type of rider is intended to give the lender the right to pay any dues that may be owed, and therefore is commonly used where an active HOA is present.

Limitations of Searching Methods.

As noted, it is not possible for any inquiry to prove with absolute certainty that no HOA exists with respect to the Subject Properties, and customary searching methods are subject to certain inherent limitations. Those limitations include, but are not limited to, the following:

1.It is possible for an HOA to exist even though the DCCR reviewed does not contain an explicit reference to an HOA, or there appears to be no DCCR. This may happen for a number of reasons. For example, there may have been a drafting error in the DCCR, or an important amendment to the DCCR or the DCCR itself could have been misfiled or incorrectly

2

 

 

referenced. Old or vague descriptions can also prevent this review from being definitive. It is also possible for a DCCR to contemplate an HOA, yet nonetheless one may not be active.

2.It is possible for an HOA to exist and yet not be registered with relevant state agencies. In some instances, an HOA may not be legally required to be registered. Furthermore, even when such a requirement applies, there may nonetheless be an HOA that is simply not in compliance with applicable registration requirements.
3.Many HOAs do not establish web sites or other presence on the world wide net. Further, internet searches are, by their nature, imprecise. Thus, the lack of applicable search “hits” from general internet searching cannot prove that an HOA is not applicable to a Subject Property.
4.It is possible that a Subject Property has never been subject to a prior mortgage. Even where a prior mortgage does exist, it is possible for the lender to have failed to include a PUD rider in the mortgage, even if the property had been subject to an HOA.
d.Additional Information Regarding Scope of Review. [(5) through (8) of Item 4]

We have not undertaken any data integrity or other review beyond what is described herein, nor was our review undertaken for the purpose of:

1.Satisfying any criteria for due diligence published by a nationally recognized statistical rating organization, or
2.Making any findings with respect to:
i.Whether the origination of the Mortgage Loans conformed to, or deviated from, stated underwriting or credit extension guidelines, standards, criteria, or other requirements,
ii.The value of the collateral securing the Mortgage Loans,
iii.Whether the originators of the Mortgage Loans complied with federal, state or local laws or regulations, or
iv.Any other factor or characteristic of the Mortgage Loans that would be material to the likelihood that the issuer of the certificates that are secured by the Mortgage Loans will pay interest and principal in accordance with applicable terms and conditions.

Our HOA Discrepancy Review is limited to the procedures set forth in (c) above. Although we believe these procedures to be customary residential title practice to locate

3

 

 
evidence that a property may be subject to an active HOA, we make no representation regarding the sufficiency of the procedures described in (c) above, either for the purpose for which this report has been requested or for any other purpose.

II.Findings and Conclusions from Our Review (Item 5 of Form ABS Due Diligence-15E)

Based upon the HOA Diligence Review conducted in accordance with the procedures outlined in Part I above, and assuming the accuracy of the information contained in the documents described therein, we concluded, as set forth in more detail in Schedule I attached hereto and subject to the limitations set forth herein, that:

To our knowledge, after inquiry as described above, except as set forth on Schedule I as indicated in the “Updated Designation” column, none of the Subject Properties set forth on Schedule I is subject to an active HOA.

Our conclusions are limited to the matters expressly stated herein, and no opinion is implied or may be inferred beyond the matters expressly stated herein. The conclusions expressed herein are given only as of the dates set forth on Schedule I, and we undertake no responsibility to update or supplement this report after the date hereof for any reason.

This report was prepared solely for the benefit of the addressees set forth above. It should not be relied on in any manner or for any purpose by any other person or entity, except for placement agents involved directly with the placement of this securitization transaction, including prospective investors or ratings agencies in connection with the offering referenced above (collectively, “Third Parties”). Accordingly, this report was not intended to create, and shall not be deemed to create any benefits, rights, duties, or obligations in or to, any such Third Parties.

4

 

 

Except as required by law, this report may not be quoted in whole or in part, including in any prospectus or offering memorandum, without our prior written consent. In addition, this report is not assignable to any person or entity without our prior written approval.

    Stewart Title Guaranty Company, a Texas
    corporation
         
         
         
    By: /s/ John Tacia  
    Name: John Tacia  
    Title: Vice President  
    Date: August 27, 2019  
         

5

 

Schedule I

 

Property Code State Description of Discrepancy Updated Designation (HOA or apparent non-HOA) Date of Updated Designation
p21-0116 IL HOA Discrepancy Non-HOA 27-Aug-19
p21-0249 IL HOA Discrepancy Non-HOA 27-Aug-19
p21-0251 IL HOA Discrepancy Non-HOA 27-Aug-19
p21-0266 IL HOA Discrepancy Non-HOA 27-Aug-19
p21-0271 IL HOA Discrepancy Non-HOA 27-Aug-19
p29-0363 CA HOA Discrepancy Non-HOA 27-Aug-19
p29-0374 CA HOA Discrepancy Non-HOA 27-Aug-19
p29-0383 CA HOA Discrepancy Non-HOA 27-Aug-19
p29-0394 CA HOA Discrepancy Non-HOA 27-Aug-19
p29-0423 CA HOA Discrepancy Non-HOA 27-Aug-19
p29-0444 CA HOA Discrepancy Non-HOA 27-Aug-19
p29-0460 CA HOA Discrepancy Non-HOA 27-Aug-19
p29-0465 CA HOA Discrepancy Non-HOA 27-Aug-19
p29-0482 CA HOA Discrepancy Non-HOA 27-Aug-19
p29-0491 CA HOA Discrepancy Non-HOA 27-Aug-19
p29-0499 CA HOA Discrepancy Non-HOA 27-Aug-19
p29-0522 CA HOA Discrepancy Non-HOA 27-Aug-19
p29-0545 CA HOA Discrepancy Non-HOA 27-Aug-19
p29-0561 CA HOA Discrepancy Non-HOA 27-Aug-19
p29-0586 CA HOA Discrepancy Non-HOA 27-Aug-19
p29-0595 CA HOA Discrepancy Non-HOA 27-Aug-19
p29-0603 CA HOA Discrepancy Non-HOA 27-Aug-19
p29-0622 CA HOA Discrepancy Non-HOA 27-Aug-19
p29-0627 CA HOA Discrepancy Non-HOA 27-Aug-19
p29-0639 CA HOA Discrepancy Non-HOA 27-Aug-19
p29-0642 CA HOA Discrepancy Non-HOA 27-Aug-19
p29-0655 CA HOA Discrepancy Non-HOA 27-Aug-19
p29-1418 CA HOA Discrepancy Non-HOA 27-Aug-19
p29-1509 CA HOA Discrepancy Non-HOA 27-Aug-19
p29-1661 CA HOA Discrepancy Non-HOA 27-Aug-19
p29-1734 CA HOA Discrepancy Non-HOA 27-Aug-19
p29-1935 CA HOA Discrepancy Non-HOA 27-Aug-19
p29-1987 CA HOA Discrepancy Non-HOA 27-Aug-19
p29-2006 CA HOA Discrepancy Non-HOA 27-Aug-19
p29-2014 CA HOA Discrepancy Non-HOA 27-Aug-19
p30-0106 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-0822 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-0977 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1007 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1010 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1022 FL HOA Discrepancy Non-HOA 27-Aug-19

 

 6 

 

p30-1025 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1027 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1037 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1048 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1052 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1055 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1058 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1064 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1068 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1088 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1094 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1098 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1109 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1140 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1148 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1176 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1185 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1204 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1227 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1233 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1274 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1282 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1291 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1301 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1303 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1320 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1329 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1335 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1342 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1348 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1349 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1357 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1361 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1383 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1482 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1498 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1512 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-1525 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-5107 FL HOA Discrepancy Non-HOA 27-Aug-19
p30-5185 FL HOA Discrepancy Non-HOA 27-Aug-19
p33-0455 IL HOA Discrepancy Non-HOA 27-Aug-19
p33-0520 IL HOA Discrepancy Non-HOA 27-Aug-19
p33-0552 IL HOA Discrepancy Non-HOA 27-Aug-19
p33-0617 IL HOA Discrepancy Non-HOA 27-Aug-19
p34-0138 WA HOA Discrepancy Non-HOA 27-Aug-19
p34-0291 WA HOA Discrepancy Non-HOA 27-Aug-19
p34-0311 WA HOA Discrepancy Non-HOA 27-Aug-19

 

 7 

 

 

p36-0359 CO HOA Discrepancy Non-HOA 27-Aug-19
p36-0369 CO HOA Discrepancy Non-HOA 27-Aug-19
p36-0396 CO HOA Discrepancy Non-HOA 27-Aug-19
p36-0413 CO HOA Discrepancy Non-HOA 27-Aug-19
p36-0457 CO HOA Discrepancy Non-HOA 27-Aug-19
p36-0470 CO HOA Discrepancy Non-HOA 27-Aug-19
p36-0476 CO HOA Discrepancy Non-HOA 27-Aug-19
p36-0479 CO HOA Discrepancy Non-HOA 27-Aug-19
p36-0504 CO HOA Discrepancy Non-HOA 27-Aug-19
p36-0533 CO HOA Discrepancy Non-HOA 27-Aug-19
p36-0536 CO HOA Discrepancy Non-HOA 27-Aug-19
p36-0581 CO HOA Discrepancy Non-HOA 27-Aug-19
p36-0585 CO HOA Discrepancy Non-HOA 27-Aug-19
p36-0589 CO HOA Discrepancy Non-HOA 27-Aug-19
p36-0625 CO HOA Discrepancy Non-HOA 27-Aug-19
p36-0632 CO HOA Discrepancy Non-HOA 27-Aug-19
p36-1838 CO HOA Discrepancy Non-HOA 27-Aug-19
p36-2347 CO HOA Discrepancy Non-HOA 27-Aug-19
p36-2896 CO HOA Discrepancy Non-HOA 27-Aug-19
p36-2951 CO HOA Discrepancy Non-HOA 27-Aug-19
p37-0095 IN HOA Discrepancy Non-HOA 27-Aug-19
p38-0194 MN HOA Discrepancy Non-HOA 27-Aug-19
p38-0230 MN HOA Discrepancy Non-HOA 27-Aug-19
p38-0252 MN HOA Discrepancy Non-HOA 27-Aug-19
p38-0302 MN HOA Discrepancy Non-HOA 27-Aug-19
p38-0315 MN HOA Discrepancy Non-HOA 27-Aug-19
p38-0318 MN HOA Discrepancy Non-HOA 27-Aug-19
p38-0348 MN HOA Discrepancy Non-HOA 27-Aug-19
p38-0350 MN HOA Discrepancy Non-HOA 27-Aug-19
p38-0363 MN HOA Discrepancy Non-HOA 27-Aug-19
p38-1617 MN HOA Discrepancy Non-HOA 27-Aug-19
p38-2111 MN HOA Discrepancy Non-HOA 27-Aug-19
p38-2192 MN HOA Discrepancy Non-HOA 27-Aug-19
p39-0025 VA HOA Discrepancy Non-HOA 27-Aug-19
p39-0154 VA HOA Discrepancy Non-HOA 27-Aug-19
p40-0079 NC HOA Discrepancy Non-HOA 27-Aug-19
p40-0150 NC HOA Discrepancy Non-HOA 27-Aug-19
p40-0156 NC HOA Discrepancy Non-HOA 27-Aug-19
p40-0167 NC HOA Discrepancy Non-HOA 27-Aug-19
p40-0173 NC HOA Discrepancy Non-HOA 27-Aug-19
p40-0239 NC HOA Discrepancy Non-HOA 27-Aug-19
p40-0244 NC HOA Discrepancy Non-HOA 27-Aug-19
p40-0267 NC HOA Discrepancy Non-HOA 27-Aug-19
p40-0270 NC HOA Discrepancy Non-HOA 27-Aug-19
p41-0030 SC HOA Discrepancy Non-HOA 27-Aug-19
p49-0021 MO HOA Discrepancy Non-HOA 27-Aug-19
p49-0022 MO HOA Discrepancy Non-HOA 27-Aug-19

 

 8 

 

 

p53-0881 PA HOA Discrepancy Non-HOA 27-Aug-19
p53-0888 PA HOA Discrepancy Non-HOA 27-Aug-19
p56-1506 TX HOA Discrepancy Non-HOA 27-Aug-19
p56-1900 TX HOA Discrepancy Non-HOA 27-Aug-19
p56-2103 TX HOA Discrepancy Non-HOA 27-Aug-19
p56-2168 TX HOA Discrepancy Non-HOA 27-Aug-19
p56-2206 TX HOA Discrepancy Non-HOA 27-Aug-19
p56-2384 TX HOA Discrepancy Non-HOA 27-Aug-19
v29-0190 CA HOA Discrepancy Non-HOA 27-Aug-19
v40-0175 NC HOA Discrepancy HOA 27-Aug-19
v49-0102 MO HOA Discrepancy HOA 27-Aug-19

 9