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Title insurance is indemnity insurance against defects in title to real property and from the invalidity or unenforceability of mortgage liens. Title insurance is sold in the United States as a result of deficiencies in the land records. There are many types of title insurance policies; however, the two most common are the standard Lenders’ Policy and Owners’ Policy.
The Lenders’ Policy is issued for the benefit of the lender and is almost always paid for by the borrower. More specifically, the lender wants to insure the loan they make on a house is properly secured against the property.
The Owners’ Policy is issued for the benefit of the buyer and is typically paid for by the Seller. The Owners’ Policy guarantees clean title when transferring title over to a buyer. The Owners’ Policy is generally issued concurrently with a Lenders’ Policy on purchase transactions.
Once an order is placed, the Company will initiate the first steps required to offer title insurance to the lender. A title search is performed and then analyzed by a title examiner. A title commitment is ultimately issued a few days after the loan has been placed and this represents a “formal” commitment to insure. The title commitment details the insurance that is being offered, but more importantly, it “formalizes” mortgages, liens, and judgments filed against the property. A title policy is issued to the lender a few days following the close of the transaction. The policy formalizes the insurance coverage and endorsements insuring the lender’s loan against the property.
Escrow services consist of four distinct parts. First, the escrow entails clearing the secured items off title or obtaining the necessary payoff information to pay the secured items through escrow. The second phase of the escrow involves the preparation of the settlement statement, commonly referred to as the Closing Disclosure (CD) and the scheduling of the signing with the consumer. The third phase of the escrow involves receipting in the loan proceeds and disbursing the money to pay off secured items. The final phase of the escrow is the recordation of the mortgage to perfect title on the new loan.