by lexingtonfinancialsvcs » Mon Dec 29, 2008 12:34 am
My wife and I are currently behind on mortgage payments.
What are our rights as the payors of the pmi insurance? If the bank tries to foreclose on our home, what can we do knowing that if we default the bank is covered by the PMI insurance? Would the bank then take the PMI settlement AND take our home? Seems to me that they can make a lot of money simply by not helping us in this tough economic time.
What are our rights as the payors of the pmi insurance? If the bank tries to foreclose on our home, what can we do knowing that if we default the bank is covered by the PMI insurance? Would the bank then take the PMI settlement AND take our home? Seems to me that they can make a lot of money simply by not helping us in this tough economic time.
Posted: Mon Dec 29, 2008 12:53 am Post Subject:
Here is what I found:
http://www.thinkglink.com/After_Foreclosure_PMI_Claims_And_Forbearance_Agreement_LAW832.html
It explained that the PMI is for the _lenders- benefit... not yours. That is, the insurance is paid by you in order to protect the lenders exposure. The PMI carrier can (and probably will) come after you to recover what they paid.
Posted: Mon Dec 29, 2008 12:56 am Post Subject:
but isn't that what insurance is for? How can the PMI carrier come after us? Thats like a life insurance company going after the driver that killed their insured in an accident!
Posted: Mon Dec 29, 2008 01:05 am Post Subject:
Basically, your lender took out a policy that guarantees that they will be paid in full if your default on the loan. The policy is _only_ meant to benefit the lender. It does not provide any protection to you. You paying for this protection was a condition of the lender loaning you the money for the home. The PMI contract was between the PMI carrier and the lender only so it does not benefit you or excuse your obligation in any way.
It's a little confusing as your paying the premium so it seems like you should benefit.
If PMI allowed people to simply walk away from their loans, it would probably cost 1000x as much as it does.
Posted: Mon Dec 29, 2008 09:18 am Post Subject:
From tcope's link:
Homeowners who purchase property and obtain a loan that exceeds 80 percent of the purchase value must pay for PMI, which protects the lender, not the buyer.
In the absence of PMI the loan would not be made because of the high risk to the lender.
but isn't that what insurance is for? How can the PMI carrier come after us? Thats like a life insurance company going after the driver that killed their insured in an accident!
No not at all. There's the little piece of paper called a Mortgage Deed and a Promissory Note recorded in county records that YOU signed that says if you don't pay your mortgage the lender or its assigns can foreclose on the property.
Remember, you PROMISED to pay back your loan.
Your analogy is absurd.
What you are suggesting is because YOU pay the PMI premium required by the lender that if YOU don't pay your mortgage and then the insurance company pays YOUR debt to the lender then YOU should be able to keep the house and the insurance company is just out their money because YOU paid the PMI premium.
Posted: Mon Dec 29, 2008 03:20 pm Post Subject:
Sorry OP, I know it sounds odd, you are paying the premium for the pmi, but YOU get zero protection from it.., and will then also will have to pay the default...but that IS the contract you signed...just because the pmi picks up your debt TO THE MORTGAGE company in no way absolves you from that debt...
Posted: Sun Feb 21, 2010 12:24 am Post Subject: PMI
I had over 20 % down on loan with an Equity calculation. $145,000-$120,000=$25,000
The mortgage company made an LTV calculation, and said that my property was under the 20% needed. $120,000/$145,000=.82474
Should I have had the option of signing over my land prior to the agreement for it to classify as a LTV calculation?
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