Pt 14 0150 (iu complete) ? ? Inis Test: 50 pts possible Lenders require Canada M

Question

Pt 14 0150 (iu complete) ? ? Inis Test: 50 pts possible Lenders require Canada Mortgage and Housing Corporation insurance on high ratio mortgages. What is the primary purpose of this insurance? O A. O B. Disability insurance for the borrowers to make sure they can pay off the house if one of them can no O C. Insurance for the lender to protect their collateral in case the borrower defaults and the home has O D. Insurance for the borrower in the event of foreclosure to compensate them for the full price they paid Life insurance for the borrowers to make sure they can pay off the house if one of them dies longer work declined in value for the home

Explanation / Answer

Answer C.

A high ratio mortgage is a mortgage in which a borrower places a down payment of less than 20% of the purchase price on a home. A high ratio mortgage will require mortgage insurance. Insurance from Canada Mortgage and Housing Corporation helps protect lender against default from borrowers.

If the value of property declines, it is highly likely that borrower may default on the loan. Hence, this insurance would help protect the lender from default.

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