Recently, we have been advised that some lenders are placing requirements in their loan closing instructions that the Creditors’ Rights Exclusion be deleted from the lenders title insurance policy. The Creditors Rights’ Exclusion may not be deleted under any circumstances nor is the addition of affirmative creditors’ rights coverage to be provided.
The Texas Insurance Code Section 2502.006 prohibits any title insurance policy in Texas from providing creditors' rights coverage. Therefore, you may not remove the exclusion for creditors' rights from any Texas policy (Exclusion 4 in the T-1 and Exclusion 6 in the T-1R and T-2), nor may any form of express insurance be provided for creditors’ rights.
Please be careful when reviewing loan closing instructions as they change often, and this request may not be readily apparent.
Feel free to contact your underwriting team at underwriting@worthnational.com if you have any questions.
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