Mortgage insurance covers a lender in the event of a foreclosure if the value of the collateral is less than 80% of the amount of the outstanding debt.The borrower pays the premium on the mortgage insurance.

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Mortgage insurance is designed to protect the lender in the event of default by the borrower. The borrower pays the premium for the mortgage insurance, but the insurance coverage is for the benefit of the lender, not the borrower. The coverage typically applies when the value of the collateral is less than 80% of the outstanding debt, which means that the borrower has less equity in the property and is considered to be at higher risk of default. Mortgage insurance is designed to protect the lender, not the borrower, in case of default. The borrower usually pays for this insurance as part of their monthly mortgage payments.

Mortgage Insurance Covers a Lender in the Event of a Foreclosure