What is a Lenders Policy?

A Lenders policy is title insurance policy that insures the mortgagee (being the lender in the mortgage document), against loss caused by invalidity or unenforceability of the mortgage lien, which might occur as a result of defective title, or against loss of priority of the mortgage. Also called a "Mortgagee Policy" or “Loan Policy”, most primary mortgage lenders will require a Loan Policy when they make a loan. The amount of insurance for the Loan Policy is based on the dollar amount of the loan; by design, the amount of insurance decreases each year as the loan is paid off.

Although the borrower usually pays for the cost for the Lenders Policy, it provides no protection for the property purchaser. For the purchaser to obtain title insurance, a separate Owners Policy must be issued.

In Pennsylvania, the title insurance rates allow for “simultaneous issue” policies, meaning that both the lender and the owner can a receive title insurance policy for the one price; almost like a buy one - get one free program. The insurance premium is based on the policy with the greater amount of insurance, however with many loan programs lending up to 100% of the purchase price of the property, the difference in premium for the owners coverage is almost negligible.

There are two kinds of Loan Policy coverages available for residential property in Pennsylvania; the more comprehensive "Enhanced Policy", and the "Standard Policy" that provides less coverage but has a slightly lower premium.  For a comparison of the two kinds of policies, click the link below:

Enhanced -vs- Standard coverages 

The title insurance policy form used in Pennsylvania is a modified version of the 2006 American Land Title Association (ALTA) policy form. This modified version of the 2006 ALTA policy form has been adopted by the Title Insurance Rating Bureau of Pennsylvania and approved for use by the Pennsylvania Insurance Department. The policy form primarily consists of three or four parts: Schedule A; Schedule B; Schedule B-II, and the policy jacket.

To view a sample of the Lenders Policy forms and review some additional details regarding the various parts of the policy, click on the appropriate links listed below:

The Policy Jacket - Standard Policy
The Policy Jacket - Enhanced Policy
Schedule A
Schedule B – Exceptions
Schedule B-II