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 Posted: Thu Feb 05, 2009 8:44 pm Post subject: when does mortgage insurance pay out on a default |
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| when can a bank make a claim on the mortgage insurance |
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dizzylakota
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| Posted: Thu Feb 05, 2009 9:44 pm Post subject: |
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I don't know for sure but a similar question was asked here and it should be known that PMI paying off a bank loan does not excuse the home owner from owing the mortgage. That is, if/when the PMI carrier pays the bank the PMI carrier will then pursue total recovery from the home owner.
PMI protects the _bank_ and allows the bank to make the loan. It does _not_ protect the home owner in any way. |
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tcope
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| Posted: Fri Feb 06, 2009 11:42 am Post subject: |
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| So is PMI an insurance that protects the bank if a homeowner defaults on their mortgage? |
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fireyone
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| Posted: Mon Feb 09, 2009 5:36 am Post subject: |
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After they have foreclosed on the house and know what they have lost. It doesn't help the former homeowner it is only to protect the bank. The former homeowner still has to pay the shortage then the mortgage insurance would be paid back.
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fatherbride
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| Posted: Mon Feb 09, 2009 11:21 am Post subject: |
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| Quote: | | So is PMI an insurance that protects the bank if a homeowner defaults on their mortgage? |
Correct fire...works kind of like this...
Owner defaults/stops making payments...
Mortgage company takes possession of the house at forclosure.
If owner won't pay, PMI pays the mortgage off.
Mortgage company sells the house, giving this money back to the PMI company
PMI company then goes after the orginal homeowner for whatever the balance was..
(good explaination and post fatherbride, and welcome to the community!)
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Lori
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| Posted: Mon Feb 09, 2009 2:01 pm Post subject: |
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This answers a question I was wondering about. Mother-in-law had to leave her house go a few years back after her husband died. They sent her a form this year and she had to pay some type of taxes on the defaulted amount. The house was mortgaged over $80,000 and they sold it at auction for less that $10,000. She got some type of W-2 and ended up having to pay in thousands this year.
So this means the bank got their money back and the PMI company can take her to court to get their money back? Wonder why they are waiting so long to do anything? The house sold last spring.
If your wondering why noone in the family jumped in its because everyone already extended so much help and she continued to make unwise decisions. We could have thrown our own money away...we did not need her to do it for us. |
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fireyone
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