Finance
The purpose of mortgage insurance (MI) for lenders is to:
AProtect the buyer if the property is damaged
BProtect the lender against loss in the event the borrower defaults on the loan✓ Correct
CEnsure the buyer can afford the monthly payment
DProvide the buyer with life insurance coverage
Explanation
Mortgage insurance protects the lender — not the borrower — against losses if the borrower defaults and the foreclosure sale does not cover the outstanding loan balance. FHA mortgage insurance premiums (MIP) and private mortgage insurance (PMI) serve this lender-protection purpose.
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