Escrow & Title
In New York, a 'lender's title insurance policy' protects:
AThe buyer's equity in the property
BThe mortgage lender against title defects up to the loan amount✓ Correct
CBoth the buyer and lender equally
DThe seller's equity at closing
Explanation
A lender's (mortgagee's) title insurance policy protects the lender against losses from title defects up to the outstanding loan amount. It does not protect the buyer's equity—that requires a separate owner's policy.
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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.
Chain of TitleThe sequential record of all transfers of ownership for a piece of property from the original patent holder to the present owner.
Math Concepts
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