Escrow & Title
A Pennsylvania buyer's lender requires a 'mortgagee title insurance policy' (also called a lender's policy). This policy protects:
AThe buyer against title defects
BThe lender's security interest up to the loan balance, decreasing as the mortgage is paid down✓ Correct
CBoth the buyer and lender equally
DThe title company against claims
Explanation
A lender's (mortgagee's) title insurance policy protects the lender's mortgage lien from title defects. Coverage equals the outstanding loan balance, decreasing over time as the loan is paid down.
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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.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Short SaleA sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
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.
Math Concepts
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