Posted on: 29th Sep, 2009 10:51 pm
Will Mortgage Insurance Pay My Debt If The Property Goes In Foreclosure?
stevecomish
welcome to mortgagefit...
Insurance for the home is made for the sole reason for protecting interest of the financer in any event of the non-payment of the amount by the creditor.Most of the unfortunate situation may occur due to death,permanent disability of the creditor,loss of job etc. In these conditions insurer will pay money to the lender on behalf you.But I doubt that insurer will pay the money just because you have foreclosed the property.
keep in touch...
welcome to mortgagefit...
Insurance for the home is made for the sole reason for protecting interest of the financer in any event of the non-payment of the amount by the creditor.Most of the unfortunate situation may occur due to death,permanent disability of the creditor,loss of job etc. In these conditions insurer will pay money to the lender on behalf you.But I doubt that insurer will pay the money just because you have foreclosed the property.
keep in touch...
another waste...manoj you clearly lack knowledge of mortgage insurance. your answer is incorrect, i'm afraid. lenders acquire mortgage insurance on high-risk (high ltv) loans so as to protect themselves against default. in the event of a default, the mortgage insurance company will pay to the lender a percentage of the overall debt. it's not on behalf of a borrower - it is strictly a contract between the lender and the mi company.
your last statement is just plain incorrect.
as for death, disability, etc. those may lead to foreclosure but they are not, in and of themselves, reason for an mi company to pay the lender.
your last statement is just plain incorrect.
as for death, disability, etc. those may lead to foreclosure but they are not, in and of themselves, reason for an mi company to pay the lender.
stevecomish,
When you ask about mortgage insurance, we in the mortgage business take that to mean Private Mortgage insurance and George correctly addressed that above.
If you mean mortgage insurance like insurance to cover your mortgage that you personally get yourself (like life insurance, but, mortgage insurance), that is a different answer.
When you ask about mortgage insurance, we in the mortgage business take that to mean Private Mortgage insurance and George correctly addressed that above.
If you mean mortgage insurance like insurance to cover your mortgage that you personally get yourself (like life insurance, but, mortgage insurance), that is a different answer.
Thanks George & jveenstra for clearing the doubt.
It is MI.
you mean to say that in case of short sale, mortgage lender should not come behind me for deficit amount? if yes, what is the calculation for it?
It is MI.
you mean to say that in case of short sale, mortgage lender should not come behind me for deficit amount? if yes, what is the calculation for it?
Hi frank,
It is true that the mortgage insurance premium protects the lender against any default by the borrower. But it does not guarantee that the lender will not collect the deficient amount borrower. The reason why they may still come after the borrower is, the mortgage insurance does not cover the entire amount of the loss suffered by the lender. In cases where there remains a huge amount of deficiency from the foreclosure sale, the insurance money cannot cover the entire loss. In such situations, the lender goes after the borrower to cover the remainder of the loss.
It is true that the mortgage insurance premium protects the lender against any default by the borrower. But it does not guarantee that the lender will not collect the deficient amount borrower. The reason why they may still come after the borrower is, the mortgage insurance does not cover the entire amount of the loss suffered by the lender. In cases where there remains a huge amount of deficiency from the foreclosure sale, the insurance money cannot cover the entire loss. In such situations, the lender goes after the borrower to cover the remainder of the loss.
i think it will not take care of your debt with the mortgage company
that was really astute analysis, lee.
Jenkin,
you mean to say that mortgage lender will try to recover deficit amount both from individual & Mortgage Insurance company
you mean to say that mortgage lender will try to recover deficit amount both from individual & Mortgage Insurance company
Mortgage insurance covers only up to 20% of the value of the house. One of the reasons why you do nto pay any PMI, when you make 20% down payment
If some one defults the lender will get the moeny form the insurance compny for up to 20% and the lender will go after the borrower for the rest of the money
If some one defults the lender will get the moeny form the insurance compny for up to 20% and the lender will go after the borrower for the rest of the money
Hi,
Is it always 20%? Do some policies vary? How do I find out what my policy covers?
Thanks
Is it always 20%? Do some policies vary? How do I find out what my policy covers?
Thanks
Hi JRS,
I guess you're speaking about Private Mortgage Insurance. You'll have to go for this insurance only when you're unable to come up with the required 20% down payment. Thus, PMI will be able to insure up to 20% of the home value.
I guess you're speaking about Private Mortgage Insurance. You'll have to go for this insurance only when you're unable to come up with the required 20% down payment. Thus, PMI will be able to insure up to 20% of the home value.
JRS, what the mortgage insurance company is covering is dependent upon your original down payment. Twenty per cent is not always the situation - in some cases, the mi covers less than that in the event of a default. And, frankly, you probably don't have any real need to know what the coverage is in your case, as the mi only kicks in if and when you default on the loan. You didn't mention defaulting as the situation, but keep in mind that they're not covering anything on your behalf - you won't get any extra dollars.