Which policy is designed for the borrower and protects the amount owed on the loan as it is paid off?

Which policy is designed for the borrower and protects the amount owed on the loan as it is paid off?

• A. Mortgagors/borrow's policy
• B. Title insurance
• C. Suit quiet title
• D. Encroachments

Answer: (A)

Borrower-focused title protection is provided by a mortgagor’s (or borrower’s) policy. This policy is issued to the person obtaining the loan and protects the borrower's interest in the property by insuring against title defects that could affect the loan’s security. In practical terms, it covers the portion of the risk tied to the outstanding loan—the amount owed on the loan—so that if a title issue surfaced, the borrower would have protection up to the loan balance. As the loan is paid down, the policy continues to serve the borrower by safeguarding the title related to that loan. The other options aren’t this borrower-specific protection: title insurance is a broader term that can refer to either owner’s or lender’s coverage; a suit quiet title is a legal action to establish ownership; encroachments refer to boundary issues and aren’t a title insurance policy.

Borrower-focused title protection is provided by a mortgagor’s (or borrower’s) policy. This policy is issued to the person obtaining the loan and protects the borrower's interest in the property by insuring against title defects that could affect the loan’s security. In practical terms, it covers the portion of the risk tied to the outstanding loan—the amount owed on the loan—so that if a title issue surfaced, the borrower would have protection up to the loan balance. As the loan is paid down, the policy continues to serve the borrower by safeguarding the title related to that loan. The other options aren’t this borrower-specific protection: title insurance is a broader term that can refer to either owner’s or lender’s coverage; a suit quiet title is a legal action to establish ownership; encroachments refer to boundary issues and aren’t a title insurance policy.