Question

1. a special policy that protects the lender in case the buyer cannot make payments or cannot make them on time.

a) tax insurance (ta)
b) payment insurance (pi)
c) buyer’s insurance (bi)
d) private mortgage insurance (pmi)

Explanation:

To solve this, we analyze each option:

• Option A: Tax Insurance (TA) is for tax - related risks, not for buyer's payment default to lender. Eliminate A.
• Option B: Payment Insurance (PI) is a general term, but in the context of mortgage/lender - buyer, it's not the specific term. Eliminate B.
• Option C: Buyer’s Insurance (BI) is for the buyer's own property or interests, not to protect the lender from buyer's payment issues. Eliminate C.
• Option D: Private Mortgage Insurance (PMI) is specifically designed to protect the lender in case the buyer (borrower) cannot make mortgage payments or makes them late, especially when the down payment is less than 20% of the home's value.

Answer:

D. Private Mortgage Insurance (PMI)