How do you actually 'hand the keys back in'?

[Steve Thatcher]

If you were to default on your mortgage because of you were deemed not to be in a position to repay due to having no employment and given the state of the country not likely to have a job for some while, does the banks mortgage indemnity gaurantee come in to play if you hand back the house at a loss to the banks?

Hi we had MIG's over here in the UK. As far as I can recall, it was a policy taken out by the borrower and paid for by him/her for the benefit of the lender. The lender could then claim on the policy. I think one of the huge downsides was that the insurer could then come after the borrower for the money they had paid out. In effect a useless piece of insurance. They were discredited and I think discontinued.

 

[wbbs]

It is many years since indemnity bonds were in place on mortgages here, it was one of the first things to go when competition for mortgages took off. It used to insure the lender for the amount above 80% borrowed. As stated above the lender got paid by the insurance company if there was a sale at a loss but the customer who had paid the one off premium on the indemnity bond got chased by the insurance company.