Mortgage Broker

Winter 2014

Mortgage Broker is the magazine of the Canadian Mortgage Brokers Association and showcases the multi-billion dollar mortgage-broking industry to all levels of government, associated organizations and other interested individuals.

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is necessary where a loan is not going into default and the borrower is still paying the mortgage, but the borrower is unable to purchase his or her own insurance coverage. e lender can have their financial interest covered. Again, there is no coverage for the borrower. Foreclosed coverage is designed to protect the lender's financial interest and is necessary where a property is in the foreclosure process and title has been, or is being transferred. Mortgage impairment insurance is an important contingent cover for lenders especially when faced with a risk of default by their borrowers. Mortgage impairment insurance is increasing in significance in an economy where homeowners and businesses are over-leveraged and they cannot weather the negative financial impacts of damage to their mortgaged residences and buildings. e risk of losses becomes even greater in a rising interest rate environment. A borrower may allow their insurance to lapse due to insurance being viewed as another expense item. e frequency and severity of catastrophic weather and natural events seems to be increasing and with these events comes more costly damage and destruction, from which many people, even when insured, cannot recover. Mortgage impairment insurance protects lenders when all other avenues of compensation fail and should form part of a lender's overall insurance program. If you are a mortgage lender and have not considered this type of coverage, this is an important insurance to consider. Borrowers are very unlikely to continue making mortgage payments if there is a significant loss. As a lender, wouldn't you want your financial interests in that property to be protected? n p46-47_Mortgage Impairment.indd 47 14-01-23 2:07 PM

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