Will mortgage insurance (PMI) protect U from a deficiency judgment in a foreclosure?
June 19th, 2009 | by admin |Does having a mortgage insurance (PMI) on a house prevent the bank and/or the PMI insurance carrier from getting a deficiency judgment again you if the house goes to foreclosure? In other words, will PMI allow a homeowner to walk away from a foreclosure without paying the bank another cent or having a deficiency judgement against you?
No, it is insurance for the bank that loaned you money to the other bank that funds them. THEY are protected if you walk, not you. You can not insure yourself for having bad character.
5 Responses to “Will mortgage insurance (PMI) protect U from a deficiency judgment in a foreclosure?”
By bob W on Jun 20, 2009 | Reply
no
References :
By alterfemego on Jun 20, 2009 | Reply
No, it only protects the lender. And yes you could have a deficiency judgement placed against you.
References :
appraiser/realtor
By justcruizin on Jun 20, 2009 | Reply
No, sorry the PMI only protects the lender.
References :
By Landlord on Jun 20, 2009 | Reply
No, it is insurance for the bank that loaned you money to the other bank that funds them. THEY are protected if you walk, not you. You can not insure yourself for having bad character.
References :
By Patrick on Jun 20, 2009 | Reply
The other answerers have it correct. PMI is insurance for the bank because loans where b uyers put less than 20% down are more likely to go into foreclosure than those that do have 20% down. Because of that all loans where borrowers put less than 20% down must have PMI.
If you go into foreclosure you will owe the bank back any money left on the loan, plus late fees, plus all fees associated with the foreclosure. Foreclosure usually adds 40 to 50 thousand dollars to the amount owed. Of course, when they sell the house they deduct the money they sold the house for from this amount.
If you are thinking of going into foreclosure try for a deed-in-lieu or to get the bank to agree to a short sale. Both are better alternatives and allow you to walk away with only minimal damage.
References :