Escrow & Title
A Minnesota buyer is purchasing a home with an FHA loan. The lender's title insurance (mortgagee's policy) protects:
AThe buyer's equity in the property
BThe lender's interest up to the loan amount✓ Correct
CBoth the buyer and lender equally
DThe FHA against losses from borrower default
Explanation
A lender's title insurance policy (mortgagee's policy) protects only the lender's interest up to the outstanding loan balance. It does not protect the buyer's equity. For FHA loans, this policy is required by the lender. Buyers who want to protect their own equity must purchase a separate owner's title insurance policy.
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