Final answer:
An ALTA title insurance policy on an existing loan will terminate in situations like sale and assumption of the loan, acceptance of a deed in lieu of foreclosure, and the refinancing of the loan. However, it will not terminate upon the sale of the property to a buyer who originates a new FHA loan as this creates a new financial arrangement.
Step-by-step explanation:
An ALTA (American Land Title Association) title insurance policy for an existing loan typically terminates when there is a significant change in the ownership or the financial arrangement of the insured property. Specifically, the policy will terminate in the following situations:
- The sale of the property and assumption of the loan
- The acceptance of a deed in lieu of foreclosure by the lender
- The refinancing of the existing loan
However, an ALTA policy will not terminate in the situation described as:
- The sale of the property to a buyer who originates a new FHA loan
This is because a new FHA loan entails a new financial arrangement and potentially a new title insurance policy to protect the new lender's interest in the property, and does not involve the continuation or assumption of the existing loan that was initially insured.