What is the role of title companies in the mortgage process?

Title companies play a crucial role in the mortgage process, primarily by conducting title searches and ensuring that the property is free of any liens or claims that could affect ownership rights. This process involves a thorough examination of public records to verify the legality of the title and identify any potential issues.

Once the title search is complete, the title company provides title insurance, which protects the lender (and sometimes the buyer) against any future claims or issues that arise related to the property's title. This insurance is vital as it offers peace of mind by safeguarding against unforeseen complications that could emerge after the purchase, such as undiscovered liens, claims of ownership, or errors in public records.

The other roles mentioned in the options, such as handling loan disbursements, appraising property value, or providing insurance against fraud, are typically performed by other entities like lenders, appraisers, or dedicated fraud prevention services. Thus, the core responsibility of title companies lies in ensuring clear titles and providing associated insurance, which makes the third option the correct choice.