Commentary

47 Mortgage Indemnity Guarantee (MIG)

BUILDING SOCIETIES vol 6(1)
| Commentary

47 Mortgage Indemnity Guarantee (MIG)

| Commentary

47 Mortgage Indemnity Guarantee (MIG)1

Whilst a building society should regard the covenant of the borrower as its principal source of repayment2, a comfortable margin in the value of the society’s security is of vital importance. The higher the loan to value (LTV)3 ratio, the greater the risks involved in such lending. A building society undertaking any new lending at a high LTV ratio must have an adequate policy in place to provide protection against the greater risks involved3. The extent of the protection in place will be a factor in determining the society’s threshold solvency ratio4.

Appropriate forms of protection

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