Escrow & Title
Which type of title insurance policy in Iowa protects the lender's security interest?
AOwner's policy
BLender's (mortgagee's) policy✓ Correct
CStandard coverage policy
DExtended coverage policy
Explanation
A lender's (mortgagee's) title insurance policy protects the lender's security interest in the property. It is typically required by lenders.
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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.
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.
Chain of TitleThe sequential record of all transfers of ownership for a piece of property from the original patent holder to the present owner.
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.
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