A loan title policy protects which party?

A loan title policy protects which party?

• A. Borrower
• B. Lender (mortgagee)
• C. Seller
• D. Title company

Answer: (B)

Loan title protection is designed to safeguard the lender’s security in the property. The loan title policy is issued for the benefit of the lender (the mortgagee) and covers losses if a defect in the title or an outstanding lien could threaten the lender’s lien or its priority, up to the loan amount. This includes issues like undisclosed or improperly recorded liens, forged documents, or other title problems that could affect the lender’s ability to foreclose or recover the loan. The borrower’s protection comes from an owner's title policy, not this loan policy, and the title company is the insurer providing the coverage.

Loan title protection is designed to safeguard the lender’s security in the property. The loan title policy is issued for the benefit of the lender (the mortgagee) and covers losses if a defect in the title or an outstanding lien could threaten the lender’s lien or its priority, up to the loan amount. This includes issues like undisclosed or improperly recorded liens, forged documents, or other title problems that could affect the lender’s ability to foreclose or recover the loan. The borrower’s protection comes from an owner's title policy, not this loan policy, and the title company is the insurer providing the coverage.