MIGgreenspun.com : LUSENET : Repossession : One Thread
I'm sorry to sound thick but can someone explain to me what the mortgage indemnity guarantee is actually for.
I assume that it is a type of insurance that a borrower pays for the lender. If the property gets repossessed the lender can claim on the MIG. The bit that confuses me is that the insurer can then claim the money back from the borrower that they paid out to the lender.
I must be getting it wrong somewhere because if you were to claim on car insuarnce the insurance company that you had paid your premiums to wouldn't be chasing you for the money they'd paid out.
They seem pointless and like I can't get my head round my you would pay an insurer X pounds for them to then claim any payout back off you.
If it isn't obvious - no my lender did not explain to me what the MIG I've paid for is for. I only know I have one because it showed up on the SARN I served.
-- Bev (Bev100@genie.co.uk), October 30, 2001
If you borrow over a certain amount, in most cases more than 75% of the house value, then the lender makes you pay for a MIG. If you default, then the lender makes a claim. What the lenders didn't always make clear - although I believe they must do now - is that the MIG is for the lender's benefit not yours.
Using your example with car insurance - if someone crashed into your car, and you made a claim, then your insurance company would pay you for the repairs. Your insurance company would then chase the other driver's insurance company for reimbursement and their insurance company pays yours. If the other person wasn't insured, then your insurance would take an action against that person.
Its the same with MIGs. The insurer insures the lender. Your defaulting on the mortgage, so the lender makes the claim and the MIG insurer pays out, but then has the right to chase you for the amount it paid out. When the insurer chases you instead of the lender, its done under the "rights of subrogation".
There are a number of people who have posted to this board who were not fully informed about MIGs. No doubt one of them will assist further.
-- pendle (firstname.lastname@example.org), October 30, 2001.
There isn't much I can add to Pendle's reply except to say that you must keep asking in writing to see the MIG itself, the terms and conditions that applied to your MIG and the explanatory material that would have accompanied it at the time it was mis-sold to you.
You are not going to get this information but you need the lender refusing it in writing so that you can present their refusal in court if needs be.
-- Lee (email@example.com), October 30, 2001.
Please see my answer to 'We are stuck between a rock and a hard place' below.
I'd also add that on this site Lee has published a very interesting letter from a lender to a borrower. This borrower had unusually asked what the MIG he was paying for was actually for - and, equally unusually, kept the letters! The lender (N&P) had at this point every opportunity to explain that the MIG would offer no protection whatsoever to the borrower, but declined to do so...... This could conceiveably be construed as evidence of the borrower being misled about a product he was being sold. That is, it could be evidence of misselling.
-- E Scott (firstname.lastname@example.org), November 21, 2001.