What is a 'mortgagee clause' in a Delaware property insurance policy?
Why A provision in the insurance policy naming the lender (mortgagee) as an additional insured and directing the insurer to pay claims to both the owner and lender Is Correct
Answer B: A provision in the insurance policy naming the lender (mortgagee) as an additional insured and directing the insurer to pay claims to both the owner and lender
Exam Tip: Escrow & Title
Escrow questions test the neutral third-party role and the sequence of closing events. Remember that the escrow agent acts as a dual agent for both buyer and seller and cannot advocate for either side.
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Key Terms to Know
Prepaid 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.
Title InsuranceInsurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.
Short SaleA sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
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