Title insurance is insurance that protects the lender and the home owner in the event there are any title defects, or if there is any fraudulent mortgage taken on the title of the property.
In every mortgage transaction, a borrower is require to take out a title insurance policy. Title insurance should not be confused with creditor insurance, mortgage default insurance or home insurance. Title insurance only protects the title or deed of the property.
If, for any reason, there is ever a fraudulent mortgage taken on the title of a home, a home owner with title insurance is protected and is not responsible for the fraudulent mortgage or lien registered on their property.