Who do mortgagee title policies primarily protect?

A mortgagee title policy primarily protects the lender who provides the financing for the property. This type of insurance safeguards the lender's investment by covering the costs associated with any claims that may arise due to issues with the title that were not uncovered during the title search. This could include undisclosed liens, ownership disputes, or other defects that could affect the lender's ability to recover the loan if the borrower defaults.

While borrowers also have a separate title policy that protects their interests, the mortgagee title policy specifically focuses on the lender's risk exposure. Real estate agents and title companies do not have the same stake in the mortgagee title policy; agents typically earn commissions from sales, while title companies are more concerned with ensuring that the transaction proceeds smoothly rather than holding a vested interest in the loan itself. Hence, the correct focus on lender protection in this context underscores the importance of ensuring that lenders can confidently finance properties without facing substantial risk from title issues.