Escrow & Title
In Colorado, the 'closing protection letter' (CPL) from a title insurance underwriter protects:
AA. The title agent from claims
BB. The buyer and lender from losses caused by the title agent's fraud, dishonesty, or failure to follow closing instructions✓ Correct
CC. The seller from buyer default
DD. All parties from market value declines
Explanation
A closing protection letter (CPL) is issued by the title insurance underwriter to the buyer and/or lender. It protects them from financial losses caused by the title company's or closing agent's negligence, fraud, or failure to follow written closing instructions — a protection that goes beyond the title insurance policy itself.
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Key Terms to Know
Title Insurance
Insurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Deed of TrustA security instrument used in many states instead of a mortgage, involving three parties: borrower (trustor), lender (beneficiary), and a neutral trustee.
Math Concepts
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