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CONDITIONS AND STIPULATIONS Continued From Reverse Side of Policy Face)
<br />2. (a.) Continuation of Insurance after Acquisition of Title by
<br />Insured Lender
<br />If this policy insures the owner of the indebtedness secured by the
<br />insured mortgage, this policy shall continue in force as of Date of
<br />Policy in favor of such insured who acquires all or any part of said
<br />estate or interest in the land described in Schedule C by foreclosure,
<br />trustee's sale, conveyance in lieu of foreclosure, or other legal man-
<br />ner which discharges the lien of the insured mortgage, and if such
<br />insured is a corporation, its transferee of the estate or interest so
<br />acquired, provided the transferee is the parent or wholly owned
<br />subsidiary of such insured; and in favor of any governmental agency
<br />or instrumentality which acquires all or any part of the estate or
<br />interest pursuant to a contract of insurance or guaranty insuring or
<br />guaranteeing the indebtedness secured by the insured mortgage.
<br />After any such acquisition the amount of insurance hereunder,
<br />exclusive of costs, attorneys' fees and expenses which the Company
<br />may be obligated to pay, shall not exceed the least of:
<br />(i) the amount of insurance stated in Schedule A;
<br />(ii) the amount of the unpaid principal of the indebtedness plus
<br />interest thereon, as determined under paragraph 6(a) (iii) hereof,
<br />expenses of foreclosure and amounts advanced to protect the lien of
<br />the insured mortgage and secured by said insured mortgage at the
<br />time of acquisition of such estate or interest in the land; or
<br />(iii) the amount paid by any governmental agency or instrumentality,
<br />if such agency or instrumentality is the insured claimant, in
<br />acquisition of such estate or interest in satisfaction of its insurance
<br />contract or guaranty.
<br />(b.) Continuation of Insurance After Conveyance of Title
<br />The coverage of this policy shall continue in force as of Date of
<br />Policy, in favor of an insured so long as such insured retains an
<br />estate or interest in the land, or owns an indebtedness secured by a
<br />purchase money mortgage given by a purchaser from such insured,
<br />or so long as such insured shall have liability by reason of covenants
<br />of warranty made by such insured in any transfer or conveyance of
<br />such estate or interest; provided, however, this policy shall not
<br />continue in force in favor of any purchaser from such insured of
<br />either said estate or interest or the indebtedness secured by a
<br />purchase money mortgage given to such insured.
<br />3. Defense and Prosecution of Actions — Notice of Claim to be
<br />Given by an Insured Claimant
<br />(a.) The Company, at its own cost and without undue delay, shall
<br />provide for the defense of an insured in litigation to the extent that
<br />such litigation involves an alleged defect, lien, encumbrance or other
<br />matter insured against by this policy.
<br />(b.) The insured shall notify the Company promptly in writing (i) in
<br />case of any litigation as set forth in (a) above, (ii) in case knowledge
<br />shall come to an insured hereunder of any claim of title or interest
<br />which is adverse to the title to the estate or interest or the lien of
<br />the insured mortgage, as insured, and which might cause loss or
<br />damage for which the Company may be liable by virtue of this
<br />policy, or (iii) if title to the estate or interest or the lien of the
<br />insured mortgage, as insured, is rejected as unmarketable. If such
<br />prompt notice shall not be given to the Company, then as to such
<br />insured all liability of the Company shall cease and terminate in
<br />regard to the matter or matters for which such prompt notice is
<br />required; provided, however, that failure to notify shall in no case
<br />prejudice the rights of any such insured under this policy unless the
<br />Company shall be prejudiced by such failure and then only to the
<br />extent of such prejudice.
<br />(c.) The Company shall have the right at its own cost to institute
<br />and without undue delay prosecute any action or proceeding or to
<br />do any other act which in its opinion may be necessary or desirable
<br />to establish the title to the estate or interest or the lien of the
<br />insured mortgage, as insured; and the Company may take any appro-
<br />priate action, whether or not it shall be liable under the terms of
<br />this policy, and shall not thereby concede liability or waive any
<br />provision of this policy.
<br />(d.) Whenever the Company shall have brought any action or inter-
<br />posed a defense as required or permitted by the provisions of this
<br />policy, the Company may pursue any such litigation to final deter-
<br />mination by a court of competent jurisdiction and expressly reserves
<br />the right, in its sole discretion, to appeal from any adverse judgment
<br />or order.
<br />(e.) In all cases where this policy permits or requires the Company
<br />to prosecute or provide for the defense of any action or proceeding,
<br />the insured hereunder shall secure to the Company the right to so
<br />prosecute or provide defense in such action or proceeding, and all
<br />appeals therein, and permit the Company to use, at its option, the
<br />name of such insured for such purpose. Whenever requested by the
<br />Company, such insured shall give the Company, at the Company's
<br />expense, all reasonable aid (1) in any such action or proceeding in
<br />effecting settlement, securing evidence, obtaining witnesses, or pros-
<br />ecuting or defending such action or proceeding, and (2) in any
<br />other act which in the opinion of the Company may be necessary or
<br />desirable to establish the title to the estate or interest or the lien of
<br />the insured mortgage, as insured, including but not limited to
<br />executing corrective or other documents.
<br />4. Proof of Loss or Damage — Limitation of Action
<br />In addition to the notices required under Paragraph 3(b) of these
<br />Conditions and Stipulations, a proof of loss or damage, signed and
<br />sworn to by the insured claimant shall be furnished to the Company
<br />within 90 days after the insured claimant shall ascertain or deter-
<br />mine the facts giving rise to such loss or damage. Such proof of loss
<br />or damage shall describe the defect in, or lien or encumbrance on
<br />the title, or other matter insured against by this policy which con-
<br />stitutes the basis of loss or damage, and, when appropriate, state the
<br />basis of calculating the amount of such loss or damage.
<br />Should such proof of loss or damage fail to state facts sufficient to
<br />enable the Company to determine its liability hereunder, insured
<br />claimant, at the written request of the Company, shall furnish such
<br />additional information as may reasonably be necessary to make such
<br />determination.
<br />No right of action shall accrue to insured claimant until 30 days
<br />after such proof of loss or damage shall have been furnished.
<br />Failure to furnish such proof of loss or damage shall terminate any
<br />liability of the Company under this policy as to such loss or damage.
<br />5. Options to Pay or Otherwise Settle Claims and Options to
<br />Purchase Indebtedness
<br />The Company shall have the option to pay or otherwise settle for or
<br />in the name of an insured claimant any claim insured against, or to
<br />terminate all liability and obligations of the Company hereunder by
<br />paying or tendering payment of the amount of insurance under this
<br />policy together with any costs, attorneys' fees and expenses
<br />incurred up to the time of such payment or tender of payment by
<br />the insured claimant and authorized by the Company. In case loss or
<br />damage is claimed under this policy by the owner of the indebted-
<br />ness secured by the insured mortgage, the Company shall have the
<br />further option to purchase such indebtedness for the amount owing
<br />thereon together with all costs, attorneys' fees and expenses which
<br />the Company is obligated hereunder to pay. If the Company offers
<br />to purchase said indebtedness as herein provided, the owner of such
<br />indebtedness shall transfer and assign said indebtedness and the
<br />mortgage and any collateral securing the same to the Company upon
<br />payment therefor as herein provided. Upon such offer being made
<br />by the Company, all liability and obligations of the Company here-
<br />under to the owner of the indebtedness secured by said insured
<br />mortgage, other than the obligation to purchase said indebtedness
<br />pursuant to this paragraph, are terminated.
<br />6. Determination and Payment of Loss
<br />(a.) The liability of the Company under this policy shall in no case
<br />exceed the least of:
<br />(i) the actual loss of the insured claimant; or
<br />(ii) the amount of insurance stated in Schedule A, or, if applicable,
<br />the amount of insurance as defined in paragraph 2(a) hereof; or
<br />(iii) if this policy insures the owner of the indebtedness secured by
<br />the insured mortgage, and provided said owner is the insured claim-
<br />ant, the amount of the unpaid principal of said indebtedness, plus
<br />interest thereon, provided such amount shall not include any addi-
<br />tional principal indebtedness created subsequent to Date of Policy,
<br />except as to amounts advanced to protect the lien of the insured
<br />mortgage and secured thereby.
<br />(b) The Company will pay, in addition to any loss insured against
<br />by this policy, all costs imposed upon an insured in litigation carried
<br />on by the Company for such insured, and all costs, attorneys' fees
<br />and expenses in litigation carried on by such insured with the
<br />written authorization of the Company.
<br />(c.) When the amount of loss or damage has been definitely fixed in
<br />accordance with the conditions of this policy, the loss or damage
<br />shall be payable within 30 days thereafter.
<br />7. Limitation of Liability
<br />No claim shall arise or be maintainable under this policy (a) if the
<br />Company, after having received notice of an alleged defect, lien or
<br />encumbrance insured against hereunder, by litigation or otherwise,
<br />removes such defect, lien or encumbrance or establishes the title, or
<br />the lien of the insured mortgage, as insured, within a reasonable
<br />time after receipt of such notice; (b) in the event of litigation until
<br />there has been a final determination by a court of competent juris-
<br />diction, and disposition of all appeals therefrom, adverse to the title
<br />or to the lien of the insured mortgage, as insured, as provided in
<br />paragraph 3 hereof; or (c) for liability voluntarily admitted or
<br />assumed by an insured without prior written consent of the Company.
<br />(CONDITIONS AND STIPULATIONS Continued and Concluded on Reverse Side of This Page)
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