Mortgage Policy from title company?

[Jonathan Sher]

Hello BP friends,

I am closing on a house next week and receiving private financing from a family member for the purchase. The title company is going to record the deed of trust, but are saying that their underwriter is requiring a "mortgage policy". My question is, is the mortgage policy basically title insurance for the lender? Is this even neccesary? I think they are just trying to nickle and dime me...

Thanks!

[Travis Sperr]

Sounds like a lenders policy, as a hard money lender I believe it to be best practice to cover your lender for the full loan amount. It is an additional fee, but it insures your family members retirement against any potential title defects up to the full loan amount (assuming it is beyond your purchase price). If the money is coming from a retirement account be sure you get the wire ordered with plenty of time to spare, every custodian is different in how quickly they move. Don’t forget to get your hold open policy for resell.