Mortgage insurance: how not to be "eternal" debtor of the bank?

Bank.ru continues the conversation about mortgage insurance. At this time we talked with Nina Smirnova, General Director of JSC "Insurance Company HMLA (SC HMLA). - Mortgage insurance - a new kind of insurance on the market. In what cases is it necessary? - True, mortgage insurance (liability insurance of the borrower on the mortgage loan) began to develop in our country is less than a year ago in addition to the standard forms, which have long been offered for a mortgage loan - is property insurance, life and title (ownership). Mortgage insurance is required by banks in the event that the borrower takes a loan with a low down payment (10%). Such credits are needed for families who purchase first home - young people have not accumulated sufficient amounts for large down payment, but having a steady income. - What guarantees provides mortgage insurance to the borrower and the bank? Consider a situation in which the borrower could not repay the loan. - The presence of mortgage insurance and gives the bank and the borrower ensures that their relationship (obligations of the borrower) will be terminated after the transfer of the mortgaged property to the bank and the bank does not come with additional requirements. Cost-effectiveness of mortgage insurance that the bank is left with a loss if the mortgaged property is sold at a loss. A borrower is not subject to the additional requirements of the bank. As a result of the crisis, many borrowers feel like "eternal" debtors of the bank: the banks for a long time could not sell the mortgaged property, sold with large losses, interest continued to accrue and the borrower's debt has increased significantly over the original loan amount. - What should be mandatory insurance for mortgages? - Under the current law is mandatory only insurance purchased on credit housing. All other types of insurance - voluntary. In issuing bank will take into account all the risks that can be realized during the term of the loan agreement, and lays them in a loan product - in the interest rate or the requirements for a down payment. The practice of mortgage lending indicates that banks offer different loan conditions (interest rates) in the presence or absence of, for example, life insurance, the borrower. For the three types of insurance (life, property and title) premium paid by annual installments. If the borrower fails to make a regular contribution, under the terms of the loan agreement, the rate on the loan can be increased. - Who, first of all, profitable mortgage insurance? The borrower can choose the insurer? - In mortgage lending bank is the beneficiary of all insurance contracts entered into by the borrower, so his interest in a reliable insurance protection is obvious. The borrower can choose an insurance company, but banks prefer to accredit the insurance companies and recommend them to the borrower. The bank selects insurers based on criteria that do not contradict the decision of the Government of the Russian Federation of 30 April 2009 N 386 "On the admissibility of cases, the agreements between credit and insurance organizations. - Is there a relationship between price and cost of mortgage insurance? - The cost of insurance does not depend on interest rates. Dependence in this case is reversed: rates on the loan may be reduced if the contract of mortgage insurance (liability insurance of the borrower, the bank's financial risk insurance). Thus, in developed markets, mortgage insurance rates are reduced by 2-3 percentage points in the presence of mortgage insurance. Insurance rate depends on parameters such as size of down payment, term of the loan agreement, the loan amount.