Mortgage Policy

The bank or mortgage company that will provide your mortgage will likely require that you buy a mortgage title insurance policy insuring its interest in your property.

When you give a mortgage to a lender, you give the lender an interest in your property as security for your promise to repay the loan. In many instances, the lender’s financial stake in the property is greater than yours. 

The mortgage gives the lender a conditional interest in the property. This means that as long as the payments on the loan secured by the mortgage are being paid, the lender’s interest is junior to yours. However, in the event you fail to meet the terms of your agreement, the lender has the right to have your interests in the property extinguished through foreclosure. Foreclosure is the mechanism that enables the lender to take or sell the property to satisfy the debt you owe.

Because the lender has a substantial sum at risk, it is entitled to seek a number of protections. One of these protections is the mortgage title insurance policy. This policy insures the lender’s interest in the property from any potential title defects. Coverage for specific risks to title in a mortgage title insurance policy is similar to the coverage provided to you with an owner policy.