What is a title policy endorsement?

What are we talking about? Endorsements can mean something different depending on the context. Athletes give equipment endorsements. We endorse checks. Political candidates endorse one another (when they’re not leg-wrestling over legislation). So what does an endorsement mean in the realm of title insurance?

If you’ve ever purchased or refinanced a home, you may have noticed some charges on the HUD called “endorsements” (depending on your state). Here’s an easy way of understanding what those are:  Title policies protect owners and lenders from various risks of liens, encumbrances, and “clouds” on title associated with lending mortgages and purchasing a home.  Title policy endorsements further bolster the power of the title policy in two ways.

1. First, an endorsement may correct or modify a previously issued policy, allowing for coverage over factors previously omitted or misrepresented.
2. Second, and more often, endorsements alter the exceptions, conditions, and stipulations of a basic title policy.  As a result, the policy holder is more thoroughly covered than an owner or lender whose policy lacks these critical additions.

In Pennsylvania, for example, every policy is fortified by the addition of three endorsements.  These endorsements protect against prior construction violations, avoid the requirement for a survey, and insure lien priority over environmental protection liens.  In addition, endorsements are available to provide further protection on PUDs, Condominiums, variable rate loans, and a lot more!  There are hundreds of available endorsements that range from very vague to extremely specific depending on the type of additional or unique coverage the lender or owner is seeking.

The availability and cost for endorsements vary by state; in fact, underwriters may automatically apply certain endorsements without a charge to the owner or lender.  While there are some “standard” endorsements that appear automatically on every loan in certain states, most endorsements are lender-specific and are required and/or requested by the lender.  The title company will not know what endorsements to add to the policy (and to add to the HUD in order to properly charge for the endorsement) until the lender provides them with a list of required/requested endorsements.  Be sure to check with Avenue 365 ahead of time regarding the availability and cost specific endorsements to meet your lender’s requirements.