Are title insurance policies required for HELOCs? Neighboring banks are informing us they are taking out junior title policies on 1st liens. Is this allowed or does it come down to how much risk the bank is willing to take?

In my state you can either order a title policy or have a title search completed that basically just shows what liens are out there. I don't know of anything "requiring" a title policy but not sure why a bank would want to make a loan on something you don't know what other liens, judgements, etc. are on it.

It's risk based.

During the heyday of the HELOC craze in 05-06, we were processing a lot of HELOCS. One way to keep the cost down for our "no-cost" HELOC was to get a Encumberance Report, review the exceptions on the report to make sure nothing stood out, and then close without title insurance.

We limited the transactions this occured on to Jr. lien, and <$150,000.

It's a risk based decision and the Bank was more or less self-insuring against title issues.

When we first started discussions on doing this, I was against it. But Sr. Management looked at everything, made the decision and we went forward with it.

Thanks you for the input!