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I have applied to my loan servicer for a deed in lieu. The underwriter has told me that the investor (Freddie Mac) will go ahead with it but that thye have "back end" mortgage insurance on the loan. WHat does "back end" mortgage insurance mean? He also said that the insurer needs to approve the DILF inorder to finalize the deal. How often do PMI companies approve/refuse these deals? I was also told that they may ask for a contribution from me to get the deal done either lump sum or payment plan. My current mortgage is 200,000 and the investor values the condo at 93,000. I need to move up north for family medical reasons and am leaving on Dec 20. I have tried to understand what the PMI company insures......is it the whole mortgage or anything over 80% of my current mortgage which would be $40,000? ANy help would be much appreciated.
thanks
I think you may be approaching this in the wrong way -- PMI is not like auto or homeowners insurance, there is not a "deductible". If you cannot live up to your mortgage obligations the PMI goes to the lender to compensate them for the losses that YOU have caused.
The PMI company is then going COME AFTER YOU to squeeze out ANYTHING THEY CAN. If you have funds and are not using them to pay off your mortgage you are violating the terms of your mortgage and the PMI company could go after pretty much any/all of your assets.
In practice that is not how a PMI company is going to utilize its resources with so many defaults right now, but THAT is ultimately what you should fear...
There are many, many nuances to the subrogation rights of private mortgage insurers. Among other things you need to determine the identity of, and insurable interests, of all the parties [you and the bank] to figure out if there is any right on the part of the insurer to try and come after you to make itself whole.
Contact a lawyer for assistance and specifically inquire what, if any, knowledge she or he has relating to private mortgage insurance subrogation claims. You will, I'm sure, have to shop around a bit as most lawyers have no experience in the area.
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