Ontario Mortgage Agent Practice Exam

What is the main purpose of Mortgage Default Insurers in a mortgage transaction?

1. To obtain title to a defaulted property

2. To compensate the lender for losses

3. To analyze the borrower's needs

4. To facilitate the funding of a transaction

The correct answer is: To compensate the lender for losses

Mortgage Default Insurers play a vital role in protecting lenders from financial losses if a borrower defaults on their mortgage loan. They do this by providing insurance coverage to the lender, ensuring that they are able to recoup any losses that may occur due to the borrower's inability to make their mortgage payments. Options A, C, and D are incorrect because they do not accurately describe the main purpose of Mortgage Default Insurers. Option A is incorrect because they do not obtain title to a defaulted property. Option C is incorrect because their main purpose is not to analyze the borrower's needs, although they may consider these needs when determining insurance coverage. Option D is incorrect because while they do facilitate the funding of a transaction by providing insurance coverage, it is not their main purpose. Instead, their main purpose is to protect the lender from losses.