First American indemnifies the lender against actual monetary loss resulting from any of the covered risks under the owners' policy, in addition to the validity, enforceability and priority of the mortgage itself. If the mortgagor pays off part of the loan and then the lender makes a further advance, the further advance up to the original mortgage amount is covered. The policy runs with the loan, irrespective of subsequent packaging. This is a key point if exit strategies include a US listing, where banks require title insurance on underlying collateral. Title insurance will also likely improve credit ratings, which allows increased leverage on Singapore REIT listings.
Legal costs to defend the title in respect of the defect are covered under both owners and lenders policies.
