Mortgage Insurance and repo? | |
A property was refinaced at $300,000.00. The owner did a little improvement and then defaulted on $289,000.00. The Mortgage company bought the property at foreclosure. Doesn,t the mortgage Insurance of the homeowner insure this loan for the mortgage company and they are out no money and anything they get for the property now is profit?
The lender (the mortage company) bought the property at the foreclosure sale. So is the lender out what the borrower owed them plus what they bought the property for?
If they sell the property REO at a loss will the mortage insurance cover this loss?
Answers:
1You are close. I believe that the PMI will pay the lender the difference between what they get at auction and the amount of the defaulted loan. So if the mortgage balance was $289K and at auction it sold for $250K the PMI would pay the lender $39K.
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