General Mortgage Knowledge · 20% of the SAFE exammedium
Correct answer: The owner's title insurance policy
The owner's title insurance policy protects the buyer against financial losses from title defects that existed before — but were not discovered during — the closing process, such as undisclosed liens, judgments, easements, or errors in public records. The lender's policy would protect the lender's interest but not the buyer's equity. Hazard insurance covers physical damage to the property (fire, wind, etc.). PMI protects the lender in the event of borrower default, not against title defects.
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