A CPL frees the lender from liability caused by fraud on the closing agent’s part, error, or negligence in complying with the terms of a real estate transaction. This means that the title insurance company or closing agent has agreed to cover the cost of misappropriated funds.
What does closing protection coverage mean?
In a Closing Protection Letter, your underwriter agrees to reimburse the addressee if your title agency is guilty of fraud or dishonesty in handling the closing money or documents, which courts have said covers more than just theft of the loan money, or if you fail to follow certain written closing instructions.
How important is closing protection coverage?
Closing Protection Coverage can give the client the peace of mind that a National Title Insurance Company, with significant financial resources, will stand behind the mistake and not just the local Title Agent. … Now Lenders provide Title Agents very specific and detailed closing instructions on every transaction.
Do I need closing protection coverage for refinance?
The homeowner’s policy stays in force as long as you or your heirs own the home. When you refinance, your lender will often require that you purchase a new lender’s policy to protect its new security interest in the property. Thus, you are buying a policy to protect your lender, not a new homeowner’s policy.
How much is closing protection coverage?
The Closing Protection Letter fee is $25 for each party protected. More specifically, $25 for a Lender CPL when there is a mortgage in either purchase or refinance transactions. $25 for a Buyer CPL in all purchase transactions.
Who does a closing protection letter protect?
A closing protection letter (sometimes “insured closing letter” or “CPL”) forms a contract between a title insurance underwriter and a lender, in which the underwriter agrees to indemnify the lender for actual losses caused by certain kinds of misconduct by the closing agent.
What is closing or settlement protection?
A Closing Protection Letter or CPL is offered before closing to protect lenders against unauthorized actions by settlement agents or failure to comply with the terms of the lender’s closing instructions. … This means that the title insurance company or closing agent has agreed to cover the cost of misappropriated funds.
Do I need closing insurance?
Is it a law in California that I must purchase title insurance when I buy or refinance a home? No. However, virtually all lenders require title insurance for the face amount of their deed of trust, whether for a purchase or refinance.
Do I need title insurance every time I refinance?
For homeowners considering a refinance, you’ll need to purchase lender’s title insurance, as lenders won’t fund your mortgage without it. Choosing to purchase an owner’s title insurance policy is optional.
What is a settlement fee at closing?
The title settlement fee, or closing fee, is a charge from the title company to cover the administrative costs of closing. Title companies may or may not list out the individual costs of the fee.
Does title change when you refinance?
When you refinance, a new title needs to be issued. This means that old lender will no longer be on the title. The new title will show the new lienholder. … When the title is updated, it will go to the appropriate party, either you or the lienholder, depending on the state.