What is an insured closing letter and why am I paying for it?

An insured closing letter, also called a closing protection letter, is issued on behalf of a title agent (i.e., title/settlement company) by the title insurance underwriter for the benefit of your mortgage lender...

In short, this letter is a form of insurance to protect your lender against certain acts (i.e., non-compliance with lender’s instructions, theft, etc.) committed by the title company.

As the lender must make sure that the title agent has authority to issue lender’s title insurance, this letter must be issued to the lender prior to the delivery of the lender’s closing package and instructions

Once the letter is issued and the loan is ready to be closed, the lender provides instructions to the title agent along with the documents for the borrower to sign. This letter provides assurances that the lender may be compensated for losses resulting from certain claims arising from the title agent’s negligent acts.

The fee for the letter is a pass-through cost to the borrower like the lender’s title insurance policy.

For further information, feel free to This email address is being protected from spambots. You need JavaScript enabled to view it.  Catherine Schmitt.


Related Articles

Comments (1)

  • Peter Berk

    Peter Berk

    18 February 2015 at 09:25 | #

    Can an individual homebuyer request a CPL if they are depositing in escrow a substantial down payment with the title company prior to the closing? Thanks


Leave a comment

You are commenting as guest.
  • Ways to save at closing

    Title charges are the largest chunk of closing costs and can vary by hundreds of dollars.

    Learn more

  • What are closing costs?

    The real estate closing process involves loan steps, legal steps and title steps.

    Learn more

  • What's title insurance?

    Insure your legal ownership just like you'd insure the building, but for lots cheaper.

    Learn more

Connect with us

Our blog contains general information only, not intended to be relied upon as, nor a substitute for, specific professional advice. Rate tables and figures that appear on our blog are deemed reliable but not guaranteed. For current rates & policies, refer to our Quick Quote and Consumer Guide. We accept no responsibility for loss occasioned to any purpose acting on or refraining from action as a result of any material on our blog.