Follow-up to Loan Modification

I've had some questions come up as to whether the lender's policy prevents a loan modification. The short answer is no, it does not prevent it. However, the title insurance problem with loan modifications is that the lender's title insurance policy specifically excludes matters that occur subsequent to the date of the policy; such as a subsequent loan modification. The reason is the lender may be breaking its lien priority and may excuse it's title insurer from honoring the title policy on the basis that an uninsured modification has impaired the insurer's right of subrogation, which is an insurer's legal right, when a claim is paid, to step into the lender's shoes and assume the lender's position in title litigation or to pursue the party responsible for the loss.