Fraud and forgery
Where a borrower has been made insolvent the bank will join a list of creditors trying to recover any sums due to them. With the benefit of a secured charge the bank will appear high on the list of creditors with a very good chance of recovering the mortgage debt. Where the mortgage has been entered into fraudulently, or the parties involved were acting under duress, the mortgage will be invalid and the chances of recovering the sums advanced will reduce dramatically.
A Mortgage Loan Protection Policy from First Title will protect a mortgagee against a number of hidden title defects that weren't discoverable during their lawyer's due diligence exercise. Such hidden defects will include fraud or forgery by the parties to the mortgage. In the event of an insured mortgage being held to be unenforceable First Title will indemnify the mortgagee for any losses suffered as a result of the lender not being able to enforce its security.