What is the primary purpose of a lender's title policy?

The primary purpose of a lender's title policy is to insure the lender against loss from valid title issues. This type of insurance is crucial in real estate transactions, as it protects the lender's financial interest in the property being financed. It covers potential disputes or problems with the title that could arise after the mortgage is issued, such as errors in public records, undisclosed liens, or fraud.

Should any claim against the title arise, the insurance provides the lender with the resources needed to address those claims, ensuring their investment is secure. This is particularly important, as the lender's financial stake in the property is significant, and any title issues can lead to substantial financial loss. Thus, the lender's title policy serves to mitigate these risks effectively, fulfilling its primary function.

The other options suggest purposes that do not align with the nature of a lender's title policy. For example, the policy does not protect the borrower directly from property loss nor does it guarantee payment for mortgage insurance, nor does it provide any tax benefits for the lender. Each of these functions falls under a different aspect of real estate or financial transactions, making them distinct from the role of a lender's title policy.