What is a closing protection letter?

A closing protection letter (CPL) is a type of non-title coverage provided to the lender by a title underwriter once an order is received. The CPL guarantees that the lender’s disbursement instructions are followed precisely. It also covers the theft of the money in escrow by any of the title employees (even though these employees usually belong to a different agency than the underwriter). For this reason, underwriters need to thoroughly vet the title agents they work with. (See Five Solutions to Keep Closings Flowing During the COVID-19 Crisis)