Legal Question in Real Estate Law in California

What you read online is either wrong or you misunderstood it. What policies are issued depends on the nature of the transaction, primarily whether a purchase or refinance. There is no such thing as a Borrower's end and a Lender's end. The lender is NEVER an insured on the policy issued to an owner, and an owner is NEVER an insured on the policy issued to a lender.

When there is a lender on a transaction, there is ONE ALTA or CLTA Loan policy issued per lender. It is issued in the full amount of the loan. Why in the world would it be for double the amount of the loan? If their security is impaired and they cannot turn to the collateral, why would they get paid twice what they loaned? That makes no sense. If it turns out that the borrower did not have valid title for some reason, and therefore the deed of trust is likewise invalid, the lender gets paid for it's loss up to the policy amount, once, not twice.

Turning to your "secondly," I cannot figure out what your question is. I can tell you, however, that any credit default insurance is NOT "basic" in any way. In fact credit default swaps and other wild derivative securities that were invented leading up to the mortgage crisis were anything BUT basic. They were wild-west securities gambling devices for traders to make money off at the expense of investors. They also have NOTHING to do with title insurance and nothing to do with the owner of the property, other than the coverage for those things is triggered by a default. They also have nothing at all to do with third party claims on title.

Finally, as to your "finally," I again have no idea what your question is. You used the term "third party beneficiary." I responded on that basis. If that's not what you meant I have no way of knowing that. I can tell you, however, that loan policies are in no way meaningfully different today than before the loan crisis, except that they now cover losses from issues with electronic transfer system such as MERS causing an impairment of the security interest, which was not clearly covered or excluded in older policies. If there is a defect in the borrower's title that results in the impairment or invalidity of the insured deed of trust, and that was not listed in the exclusions in the policy, then the lender is covered for any resulting loss up to the full value of the loan. Nothing more and nothing less.