Finance
A Florida lender requires 'title insurance' as a condition of making a mortgage loan. This is:
AIllegal — lenders cannot require title insurance
BStandard and legal — lenders require a mortgagee's title insurance policy to protect their interest✓ Correct
COnly required for FHA loans
DOnly required for commercial mortgages
Explanation
Lenders routinely require a mortgagee's title insurance policy as a condition of making a mortgage loan. This protects the lender's security interest against title defects.
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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.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Math Concepts
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