Who issues a Closing Protection Letter in a loan transaction?

A Closing Protection Letter (CPL) is a document issued by a title insurer, which provides assurance to a lender that the title company will protect the lender from certain types of losses that could occur as a result of the actions of the title agent during a real estate transaction. This letter acts as a form of insurance that covers specific risks, such as misappropriation of funds or failure to comply with the instructions concerning the closing of the loan.

In this context, the title insurer is taking on the responsibility to safeguard the lender against potential losses that could arise due to the conduct of the title agent in handling the closing process. The issuance of the CPL directly correlates with the title insurer's obligation to ensure the transaction is conducted properly, thereby maintaining the trust and confidence necessary for lenders to proceed with real estate transactions.

Other options involve roles in the transaction that do not accurately reflect the nature of who provides the CPL. The correct answer encapsulates the essential function of a title insurer in protecting the lender’s interests during the closing process, which is critical in real estate financing transactions.