Mortgage Insurance


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Mortgage Insurance

An insurance policy that provides coverage to a lender in the event that a borrower defaults on a mortgage. This ensures that the lender does not incur a loss if the borrower is unable to repay the loan. While the lender pays the premium, it generally passes on payment to the borrower (and may roll it into the monthly mortgage payment). A lender may require a borrower to pay for mortgage insurance in certain high risk situations. See also: Loan-to-Value Ratio.

Mortgage Insurance

Insurance provided the lender against loss on a mortgage in the event of borrower default.

In the U.S., all FHA and VA mortgages are insured by the federal government. On other mortgages, the general practice is to require mortgage insurance from a private mortgage insurer when the loan amount exceeds 80% of property value. Borrowers pay the insurance premium in all cases. See Private Mortgage Insurance.

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The basis for the monoline structure dates back to the original form of mortgage insurance in the early 1900s, when losses in other property/casualty business lines took surplus away from mortgage insurers.
Private mortgage insurance is usually required by lenders if a borrower makes less than a 20 percent down payment on a home.
For example, lenders usually require a borrower to purchase mortgage insurance from a public or private mortgage insurer if the down payment is less than 20 percent of the home's appraised value.
Genworth Financial Mortgage Insurance Pty Ltd (Australia)
The interface is designed to provide lenders using the Loan Producer system with a means to send mortgage insurance applications directly from Loan Producer to any mortgage insurance provider that offers a Web service that complies with MISMO[R]'s Mortgage Insurance Application Request and Response requirements.

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