Finance
What is the primary purpose of private mortgage insurance (PMI) in Alaska real estate transactions?
AProtects the borrower if the lender fails
BProtects the lender against borrower default when LTV exceeds 80%✓ Correct
CProvides life insurance coverage tied to the mortgage balance
DInsures the title against defects discovered after closing
Explanation
Private mortgage insurance protects the lender (not the borrower) against losses from default. It is typically required when the loan-to-value ratio exceeds 80%, meaning the borrower is making less than a 20% down payment.
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