It is basically (via issuance of a Closing Protection Letter) insurance that will bind the title underwriter to cover you in the event of a loss due to “theft misappropriation, fraud, or other failure to properly disburse settlement, closing or escrow funds…” by the licensed agent.
What is closing protection coverage and do I need it?
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.
Is a closing protection letter the same as title insurance?
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.
Is closing protection coverage necessary for refinance?
To the lender, a refinance loan is no different than any other home loan. So, your lender will want to insure that its new loan is protected by title insurance, just as the original lender required. Therefore, when you refinance you are buying a title policy to protect your lender.
How much does closing protection coverage cost?
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.
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.
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.
Does a seller need closing protection coverage?
Whenever the discussion of Closing Protection Coverage comes up amongst Title Agents, it generally centers around the protections afforded the Lender. This is because the Lender always requires the coverage and few buyers and sellers request the protection.
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.
Why is title insurance required on a refinance?
When you refinance your home, lenders will generally require you obtain a title insurance policy on their behalf. These policies are called lender policies and only protect the lender in case of any defect or fraud related to your title.
What is the difference between owners title insurance and lenders?
Owner’s title insurance protects the owner from claims against the title that predate the purchase of the property, and lender’s title insurance protects the lender. That is the primary difference between the two.
What is a title protection fee?
A one-off, non–refundable payment similar to title protection insurance as it protects the lender against loss caused by legal matters relating to the title of the property. Similar to LPF, it protects Pepper Money against the unfortunate event of a defaulted loan.
What is title binder fee?
Title Binder Fee – Fee is for creating a title insurance binder, or commitment, which is the title insurer’s commitment to issue a title insurance policy based upon the terms and conditions stated therein.
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.