Why does the lender need title insurance?

Title insurance helps protect buyer/borrower who has purchased real estate against another party making a claim challenging the ownership of or lien against a property. The title insurance company will handle any issues that arise during the property sale or refinance, and if a competing claim of ownership is deemed legitimate, the title insurance company is responsible for payment of any fees to the claimant. The reason why hard money lenders insist on being covered under title insurance is to have the same protection as the borrower/buyer.