National Marine Bankers AssociationNovember 12 – 14, 2006

Key Largo, Florida

Victor I. Koock

Here’s The Problem

BORROWER/OWNER

CATERPILLARFiled July 17

INSURANCEPlaced July 8

Here’s Another Problem

ANOTHER MORTGAGE(FILED BUT DID NOT APPEAR IN THE ABSTRACT)

GECC(RECORDED WITH COAST GUARD)

ENERGY VII

Try This Problem

PRUDENTIAL INSURANCE COMPANY

92 , 000 ,000.00$ .

Fleet Mortgage

TYPOGRAPHICAL ERROR!!!

One Last Problem

CHAPEL SANTIAGO

JONES

SPARKMAN

MARYLAND NATIONAL BANKFROMKEY BANK

Sent a bunch of lawyers’ kids to college

All involved title issues that were difficult to uncover even with the best due diligence

Title insurance affords protection for those types of losses

COMMON THREADS

Title insurance protects the lender for lack of priority of the Preferred Mortgage over any lien for Necessaries

Title insurance covers Cost of Defense

Caterpillar Case

Title Insurance Covers:

Fraud

Invalidity or Unenforceability of Preferred Mortgage

Priority of another lien over the Preferred Mortgage

Cost of Defense

Energy VII / GECC Case

Failure of the insured Preferred Mortgage to be a Preferred Mortgage as defined in the U.S. Code

Cost of Defense

Prudential and the Missing Decimal

Title Insurance Covers:Title to vessel being vested other than as

insuredDefects in the TitleFraudFailure of the insured mortgage to be a

Preferred MortgageCost of Defense

MADAM CHAPEL

1) Title to the vessel is as it has been represented to be;

2) The Vessel is free of liens and encumbrances;

3) The Transaction is free of fraud, errors or mistakes;

4) Monies are distributed properly;

5) Preferred Mortgage has the Priority that was expected.

Five Significant Points Covered byTitle Insurance

COST OF DEFENSE

Disclosure Form for Lenders

Delayed Document Filings (more than 30 days after execution date)– 88.1% of vessel abstracts had delayed document filings– 80.2% of vessel abstracts had delayed document filings

that were either a Bill of Sale or a Preferred Mortgage Claims

– 19.8% of vessel abstracts had one or more claims filed– 7.9% of vessel abstracts had one or more unsatisfied

claims (no marshal’s sale)

Highlights from Study of more than 100 Vessel Abstracts

Out of Registry or Deleted from Documentation at one time: – Foreign or State Registry

2.8% foreign registered at one time 9.9% state registered at one time

– Other Deletions from Documentation - 15.8% Date Errors - 11.8% of vessel abstracts contained one or more

date errors Transfers of Interest and Preferred Mortgages

– Vessels were sold an average of 3.96 times– Vessels were mortgaged an average of 3.16 times

Highlights from Study of more than 100 Vessel Abstracts