by Kelleymc905 » Wed Oct 20, 2010 03:34 am
Have you ever heard of a bank doing a short sale on a house, recovering under PMI and then attempting to sue the defaulted previous pawner forth difference? How about thePMI company? This is in Florida
Posted: Wed Oct 20, 2010 05:00 am Post Subject:
I'd bet the PMI company would/could file suit. They only guarantee the repayment of the loan if the owner is in default... I don't think they waive their right of recovery against the home owner.
Posted: Fri Oct 22, 2010 12:48 am Post Subject:
Did the bank actually sue for it? What do you mean by 'attempting to sue'?
I don't think they waive their right of recovery against the home owner.
I'd agree with that.
Posted: Sun Oct 24, 2010 10:29 pm Post Subject:
PMI Group has been accused of securities fraud. If you are a current or former employee or are a member of any of PMI Group, Inc. investment plans or profit sharing retirement plans you may be included in this possible PMI Group, Inc. 401K or Employee Retirement Income Security Act (ERISA) class action. If you purchased or held PMI Group, Inc. stock in one of those plans during the periods November 2, 2006 to March 3, 2008, you may have a claim.
Insurance in the United States -- (Link deleted by Moderator: InsTeacher per Terms of Use)
Posted: Mon Oct 25, 2010 03:34 pm Post Subject:
I don't think the OP was referring to the company PMI. I believe they are referring to Private Mortgage Insurance.
InsTeacher 8)
Posted: Tue Oct 26, 2010 05:13 pm Post Subject:
This post has been previously posted in another thread, where it has also been answered more completely.
PMI protects the lender in the event it does not recover its financial loss when a loan DEFAULTS. In a short sale, there is no default, but there is the potential for financial loss. Most short sales involve the transfer of the original loan to a new borrower, but with a revision in the terms of the note (lower principal, lower interest rate, etc).
Since there is no "cause of action" under the PMI coverage in a short sale, there is no claim that can be made against that policy. Most lenders suck it up as the cost of doing business with the wrong person (or shoddy business practices). They send the former borrower a Form 1099 reporting the difference between the outstanding principal and the sales price as a "forgiven debt" and write it off on their taxes.
The former debtor then must report the value of the unpaid debt and pay income tax on it. If the lender has claimed a tax deduction and then sues to recover, they would have to pay tax on the recovered amount. So most would never sue. The deduction from taxable income is usually more beneficial than the cost of a civil action with little chance of actual monetary recovery.
If the property was lost to foreclosure, then PMI would pay the loss, and it would not be recoverable from the former debtor.
Add your comment