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MIG taken out now being chased for 'losses'

emmdee57
emmdee57 Posts: 37 Forumite
Part of the Furniture
in Mortgages & endowments
Hi Guys. I hope someone can advise us. My partner and I purchased a house in 2002 and we had to pay c£3000 for a Mortgage Indemnity Guarantee. I was made bankrupt in 2009 and the property was repossessed in early 2010. My partner is now being chased by solicitors (HL Solicitors of Manchester) asking her to make arrangements to pay the outstanding debt of £4,166 Is this right? My understanding at the time was that MIG was to protect the bank if such an outcome occurred. Please help. She is going out of her mind with worry.

Thank you
«13

Comments

  • betmunch
    betmunch Posts: 3,126 Forumite
    Sadly I believe this is right. As I understand it the MIG protects the bank, but when everything is settled the MIG people can come after you for what they have paid to the bank. My knowledge is limited to the answers of a multiple guess exam, hopefully someone with actual experience of the situation will be along soon to clarify
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • GMS
    GMS Posts: 5,388 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    Google subrigation.

    Basically the insurer can pursue you for the money they paid the lender.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Wh05apk
    Wh05apk Posts: 2,938 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    GMS wrote: »
    Google subrigation.

    Basically the insurer can pursue you for the money they paid the lender.

    You might do better googling "subrogation":rotfl:

    http://lmgtfy.com/?q=subrogation
    I am a mortgage adviser.
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • GMS
    GMS Posts: 5,388 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    Wh05apk wrote: »
    You might do better googling "subrogation":rotfl:

    http://lmgtfy.com/?q=subrogation

    Apologies. Sausage fingers on the keys!
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Cazza
    Cazza Posts: 1,165 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    betmunch wrote: »
    Sadly I believe this is right. As I understand it the MIG protects the bank, but when everything is settled the MIG people can come after you for what they have paid to the bank. My knowledge is limited to the answers of a multiple guess exam, hopefully someone with actual experience of the situation will be along soon to clarify

    Yes, this is my understanding from my CeMAP training too. So sorry OP :(
  • Joe_Bloggs
    Joe_Bloggs Posts: 4,535 Forumite
    In ignorance I suggest that the OP settle for the difference between the outstanding debt and the original premium. Possibly the effective nature of this insurance has been mis-sold /oversold or misused.

    J_B.
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Joe_Bloggs wrote: »
    Possibly the effective nature of this insurance has been mis-sold /oversold or misused.

    Not the case. The insurance is for the benefit of the lender. In effect the debt transfers to the insurer. Who can then seek recovery.
  • Joe_Bloggs
    Joe_Bloggs Posts: 4,535 Forumite
    Let the lender pay the premium then.
    J_B.
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Joe_Bloggs wrote: »
    Let the lender pay the premium then.
    J_B.

    The MIG would have been a contractual condition of the mortgage offer.
  • SouthCoast
    SouthCoast Posts: 1,985 Forumite
    I guess that your liability under MIG would have formed part of your bankrupt estate.

    The lender can chase any joint holders of the original debt.

    More information from National Debtline on mortgage shortfalls and MIG:
    http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=11_mortgage_shortfalls
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