Finance
What is the purpose of Private Mortgage Insurance (PMI) in a conventional loan?
AIt protects the buyer if the property value drops
BIt protects the lender if the borrower defaults when LTV exceeds 80%✓ Correct
CIt replaces homeowner's insurance
DIt is required by NCREC on all transactions
Explanation
PMI protects the lender—not the borrower—against loss if the borrower defaults. It is typically required when the LTV ratio exceeds 80%.
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