Final answer:
An ALTA Loan Policy of Title Insurance insures the mortgagee, the entity that provides the loan secured by a mortgage on the property. This policy protects against losses due to title defects that could affect the mortgage's value or enforceability. It is essential in protecting the financial interests of the lender in the property transaction.
Step-by-step explanation:
An ALTA Loan Policy of Title Insurance primarily insures the party who holds an interest in the property that is subject to the title, often in the context of a mortgage. The policy safeguards against losses from defects in the title that are unknown at the time the policy is issued. With regard to the specific parties mentioned, the mortgagee — the lender or the entity receiving the mortgage — is the one insured under an ALTA Loan Policy. This is because the mortgagee has a financial interest in the property as security for the loan provided to the borrower. The ALTA policy covers the mortgagee against potential losses due to title defects or problems that may affect the value or enforceability of the mortgage.
It is important for students studying real estate, law, or finance to understand the various roles of the parties involved in property transactions. To clarify, here are quick definitions: the grantor is the seller or person transferring the property; the grantee is the buyer or recipient; the mortgagor is the borrower; and, occasionally, a trustee may hold property in trust for the benefit of another party. In the case of title insurance, however, it is the interest of the lender/mortgagee that is being insured against hidden risks or future claims against the property that could affect its title.