Yes it's legal - as mortgagees in possession they are free to claim on an insurance policy which covers them for losses or potential losses against the security (i.e. the property). In plain English they have the property and what they do with it after default is (they think) up to them, subject to the best possible sale value being obtained. They're not quite playing ball I'd say, because it implies that they assumed it would realise a shortfall (shock horror, no underselling there then) and that you were in the can for the debt.(posted 8220 days ago)