Today’s interest rate environment has propelled the use of interest rate swaps, which are essentially an interest rate hedge. Title insurance plays a key role in the transaction. Customarily, the swap lender requires the borrower’s obligation under the interest rate swap agreement to be properly secured by the mortgage or deed of trust. The terms of the basic loan policy, however, essentially exclude the swap transaction from coverage. Enter the ALTA 29 Series Swap Endorsements. 

What is an endorsement?

Title insurance endorsements are used to modify or amend the basic policy by making an addition to, or providing a limitation to coverage. Endorsements are often accompanied by extra requirements, particularly when expanding coverage beyond the basic policy coverages.  There is a series of ALTA 29 Swap Endorsements which meet the need for additional coverage in a swap transaction.

Why is an ALTA 29 Swap Endorsement needed?

The necessity of a Swap endorsement has three prongs:

1.Filling the Coverage Gap for Variable Interest

The 2006 ALTA Loan Policy excludes coverage for loss sustained by the insured lender in the event a court rules that the mortgage is invalid or unenforceable because the mortgage provides for changes in the rate of interest .  The ALTA 29 is one of the endorsements that expands coverage to address this exclusion.  

2. Securing the Interest Rate Exchange Agreement

Both the primary lender and the swap lender become insureds to the policy when a swap endorsement is issued. In order to issue the endorsement, underwriting must determine that the security instrument properly secures the borrower’s obligation under the Interest Rate Exchange Agreement, in addition to the Promissory Note. The endorsement provides coverage in the event that the borrower’s obligation under the Interest Rate Exchange Agreement does not have the same priority as the recording date and time of the deed of trust. 

3. Covering Breakage Fees

“Breakage” occurs when the borrower defaults on its obligations to the swap lender or in the case of early termination of the swap agreement, and is, essentially liquidated damages owed by the borrower to the swap lender. Underwriting must determine that the security instrument properly secures breakage fees.

Limitations to Swap Endorsement

Although expanding certain coverage, Swap endorsements do set forth certain exceptions to coverage. As per the ALTA 29, those exceptions include: (1) changes to the interest rate swap agreement that occur after the date of the endorsement; (2) the stay, rejection or avoidance of the mortgage, or other remedy ordered by a bankruptcy court or state court applying state insolvency or creditors’ rights law; (3) the calculation by a court of the amount of the borrower’s swap obligation; or (4) the invalidity or lack of priority of the mortgage if caused by the failure to pay mortgage recording taxes. These are items over which the insurer has no control, and thus declines to provide coverage for.

Which ALTA 29 Endorsement do I need?

There are a series of four Swap Endorsements available. How your Swap financing is structured drives the selection of the endorsements. The usage of these endorsements primarily relies on whether the borrower’s obligation under the Interest Rate Exchange Agreement is characterized as principal or interest, and whether the amount of additional coverage needs to be increased to cover “additional interest.” 

What is the cost?

This varies depending on the endorsement requested and the amount of additional interest to be insured. Please contact your underwriter to determine cost.

Who do I contact with questions regarding a Swap Endorsement?

TitleCore National Commercial Underwriting Team:


Barb Dohmen (402) 934-4753,  

Tom Low (402) 934-4758,

Greg Aschoff (402) 934-4781,


Beau Vandegrift (402) 420-1001,

We love hearing from you- don’t hesitate to reach out!

About the Author-

Barb Dohmen is a Commercial Underwriter in TitleCore National’s Omaha office. Barb is a licensed attorney in Nebraska, as well as a Nebraska Title Insurance Producer. She graduated from Creighton University School of Law in 2015 with a J.D. and an M.S. in Government Organization and Leadership.  Barb’s organizational involvement includes the following: Member of the Real Estate Practice Guidelines Section of the Nebraska State Bar Association, where she recently assisted with revision of the Nebraska Title Standards; Nebraska Land Title Association Legislative Committee Member; CREW Omaha Metro Member; Chapter Life Advisor for Alpha Xi Delta at UNO; and completion of a Certificate in Professional and Career Development from the Nebraska Business Development Center at UNO. Barb enjoys spending time with her daughter, Isabelle, and enjoys being active and exploring Omaha in her free time.