Mortgage insurance (PMI, loan, premium, loan)

[marlin932]

Do you have a mortgage with your bank? Are the premiums paid monthly by direct debit? If so you are strongly advised to contact your insurer to find out if the policy has not lapsed. In a recent case a householder is believed to have received a letter from his insurer warning him that the last monthly mpremium had not been paid. It is believed that he rang his bank and was told they would look into it. Another letter arrived from the insurer to say that the policy had n ow lapsed. It is assumed the house holder again rang the bank to be told after a few days that there had been a computer glitch and that premium payments were resumed and noted in his statements. Shortly afterwards the householder died. His divorced wife was told the mortgage was all in order. Later she was told the policy had lapsed. Bank statements could not befound and the bank failed to provide copies.

[SmartMoney]

Originally Posted by marlin932

Do you have a mortgage with your bank? Are the premiums paid monthly by direct debit? If so you are strongly advised to contact your insurer to find out if the policy has not lapsed. In a recent case a householder is believed to have received a letter from his insurer warning him that the last monthly mpremium had not been paid. It is believed that he rang his bank and was told they would look into it. Another letter arrived from the insurer to say that the policy had n ow lapsed. It is assumed the house holder again rang the bank to be told after a few days that there had been a computer glitch and that premium payments were resumed and noted in his statements. Shortly afterwards the householder died. His divorced wife was told the mortgage was all in order. Later she was told the policy had lapsed. Bank statements could not befound and the bank failed to provide copies.

WOW, I think there is a mix up of at least three different insurances in the post. Maybe then the OP can tell us which one they are referring to. Until I read about the death issue, I was certain it was hazard. Now I have no clue, but here goes:

MORTGAGE INSURANCE, also called PMI or MIP. Required to be paid by the borrower in the monthly payment when there is less than 20% equity in the financed property. THIS IS DEFAULT INSURANCE. If the loan goes into foreclosure, some of the lender's losses are covered. Not optional, required, only benefits lender.

HAZARD INSURANCE, also called fire or homeowner's insurance. Paid monthly, 1/12th of annual premium. Pays to rebuild home in the event of a casualty loss. BENEFITS HOMEOWNER TO REPAIR, BENEFITS LENDER TO PROTECT COLLATERAL. Not optional. Benefits paid jointly to lender and homeowner.

MORTGAGE LIFE INSURANCE, aka Life policy for that specific home, not a whole life policy, not portable. Pays off mortgage upon death of borrower. BENEFITS HEIRS TO HOMEOWNER. Optional, benefits pay off mortgage.

It's hard to determine in the post which coverage the OP is discussing, usually the lender would have to have an indemnity plan or E&O (another insurance, lol) in place to cover gross negligence. In the event of homeowner's and mortgage life, the borrower should have been notified directly if premiums were not received. Mortgage life is optional, it's entirely possible the borrower got tired of paying it....it's said to be the biggest waste of money in the insurance industry. (A whole life policy, one that can be moved from home to home is preferred and cheaper over time). Of course, those w/ deaths in the family will disagree.

[brokerdave]

sounds like a bs story to get people involved to link a life insurance policy