Lenders can enjoy the benefits of a title insurance policy to safeguard their investment against losses arising from fraud and forgery, all for a one-time premium.
Forgery: A husband fraudulently removed his wife’s name from a property deed. He then borrowed money against the house and fled the country. When the lender pursued the husband for mortgage arrears and attempted to re-possess the property, the wife asserted her interest in the property.
Fraud: A lender granted a mortgage to a customer with a 120 year lease on a property. The Land Registry registered a Good Leasehold Title since the full details of the freehold title could not be deduced. The borrower defaulted on the mortgage and the lease was declared a fraud when the actual property owner produced a freehold title. The Land Registry deleted the leasehold title and the lender’s charge.
Deception: A borrower deliberately failed to disclose to the lender that his mother had a right to live in the property. The borrower failed to make payments but the lender could not sell the property without the mother’s consent.
In all of these cases, the lender is covered for their losses by title insurance. Title insurance helps mitigate the risks of issuing mortgages and provides cover against fraud and other title issues.