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Oh, and make no mistake that LMI is for the safety and convenience of the lender - not the debtor. I.e, the debtor is not absolved of his ability to pay the loan merely because he paid LMI. The insurer covers the lender's risk, not the borrower's.

Ordinary insurance principles would suggest that the LMI insurer would pay the difference to the bank and then subrogate into the shoes of the bank and pursue the defaulting debtor to recover the difference. Same way your car insurance works if somebody else prangs your car - your insurer...

What Kirk and Ridin-High said. Most states have legislation imposing an obligation on mortgagees and receivers (in the case of the Corporations Act) to exercise reasonable care to achieve market value and whether this obligation is satisfied is largely determined by the process and the...