If the situation persists and home prices level off or even depreciate like they did 10-years ago, you may be unable to sell your home because you owe more than the value. You may also be unable to refinance the loan because you exceed the maximum loan to value limits. Avoid this like the plague. What is worse is the fact that because the lender is hiding it as a fee rather than points, they rob you of the tax deduction. Paying too much for Title Insurance.
Title insurance is needed each time a mortgage loan is granted.
This is because it insures the title to the property is free from any surprise liens. So in essence, it covers the timeframe prior to the mortgage closing. That is why a new one needs to be done on a refinance. There are many different rates for title insurance. Watch for junk fees.