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. Suppose a borrower has paid down their mortgage from $300,000 to $280,000 when they default. The home is sold at foreclosure for $200,000. If the borrower has PMI, insuring the top 30% of the loan,...

. Suppose a borrower has paid down their mortgage from $300,000 to $280,000 when they default. The home is sold at foreclosure for $200,000. If the borrower has PMI, insuring the top 30% of the loan, the lender's loss will be __________. If the borrower had an FHA loan, the lender's loss will be _____________.

A $0; $0

B $10,000, $0

C $16,000; $0

D $10,000; $80,000

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Answer #1

Answer :- Option B). $ 10,000, $0.

Explanation :- Lender loss (if borrower having PMI insuring system) = (300000 * 30 %) - (280000 - 20000)

= 90000 - 80000

= $ 10000

Lender loss (if borrower having FHA loan system) = $ 0.

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