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What Is A Closing Protection Letter (CPL)?
In our series of answering the most frequently asked closing questions, this one barely qualifies. It actually ranks kind of low on the list and the charge for it is pretty low also – $50. That amount is nothing to sneeze at but as far as closing costs go – it's a minor one.
Occasionally, during a closing someone will ask what is a CPL, aka ICL (insured closing letter)? Very shortly after I launch into my explanation, their eyes glaze over and I can see the regret on their face for having asked the question.
Simply put, this fee is to protect the mortgage company from me, the closing attorney. It's a form of insurance that the title company will issue to the lender to protect them from the closing agent's errors, fraud or negligence.
When you consider that many mortgage companies are making loans across the country – one big risk is the quality of the various people they are relying on to close the deal. For example, when a lender from New York wants to make a real estate loan in Memphis, Tennessee, naturally they would call us at CloseTrak because they know we have been in business a long time, we do a great job for our clients and have a great reputation in the community. Even knowing that, they won't allow us to close for them unless we can provide them a CPL or ICL. In other words, despite what they know about us, they want insurance that we will do everything as instructed.