Mortgage indemnity

Mortgage indemnity is insurance which people's lender may take out for its protection in case, at some future stage, they fall significantly behind with their mortgage payments and their lender has to repossess their property and sell it.

If the property is sold for less than the amount of their outstanding mortgage, their lender can claim on the mortgage indemnity to recover some (or all) of its loss.

The basic security for the mortgage is their property. The mortgage indemnity, therefore, acts as a form of additional security for their lender. It is not, however, additional security for them.