Quote:
Originally Posted by retiredguy123
I get it that some people opt out of the owners title insurance on a new house because they think the risk is very low. But, the lender always requires a lenders title insurance policy as part of the closing costs. If the risk is so low, why don't the lenders opt out of the policy and reduce the closing costs to be more competitive with other lenders?
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Disclaimer: Not a real estate or banking lawyer.
My guess is the lender does not have a choice and is required by law to demand the insurance. Remember, the bank isn't playing with its own money, it is using its depositors' money to make these loans. Banking regulations looking out for depositors might limit the amount of risk a bank is allowed to take.