Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Does anyone out there know the answer to the following question:
State: NC
Background:
A borrower has a home that goes into foreclosure and then is sold at a foreclosure sale, resulting in a small deficiency balance (meaning the home is sold for slightly less than the outstanding balance, plus interest, plus legal fees) of around $3500.
The lender then files a loss claim with the private mortgage insurance (PMI) company, which the PMI company pays.
The PMI company (NOT the lender) then, a year later, sues the borrower in a civil suit for the deficiency balance based on the fact that they (the PMI company) paid out more in the loss claim than the amount of the deficiency balance.
Questions:
1. Does anyone know if this is legal?
2. If yes, how is this legal? The whole point of paying PMI in the first place is to protect the lender in just such a case of default.
Any thoughts welcome!
(Oh, and before I'm bombarded by anyone who has negative thoughts about individuals who let their homes go into foreclosure, this particular home was lost because of unexpected medical disability. Kindly resist with your comments.)
If the suit has been filed it does not matter if every single viewer on city-data thinks this is legal. It only matters if one person that wears a black rob and sits in a NC courthouse does. Get a lawyer, don't waste time. If you have time use it to ask around about attorneys that would be experienced in this type of case.
I appreciate the advice. However, even experienced real estate attys don't know the answer to this one (I've already asked more than one of them), and to research the answer would cost almost as much as the deficiency balance itself.
I was hoping that someone out here may have already experienced something similar and could share their experience.
This not a question about typical real estate law. I would suggest that you really do need to find someone who works for the kind of firm that typically works FOR A LENDER -- they will cost more but they also know if this is a legit action or something that the lender is just doing as a last ditch effort to try and get blood out may not be a turnip...
Every day larger firms hurl suits of questionable legal standing at each other they generate a ton fees from this. Some firms even prey on folks that should be in bankruptcy, just as you've found if you have the money you probably going to end up spending as much in legal fees...
Most law schools have a clinic, overseen by real licensed members of the bar, where the students research the cases. This might be perfect for you. Call the biggest closest law school and ask for their clinic. I bet the students would love to figure out if there are lender related firms preying on folks already beat-up by a foreclosure...
Purely by accident the other day, I DID call an atty who works for the lender/creditor/bank side of the equation. I had NO IDEA that his man was, as I found out later, one of the "preeminent" real estate litigation attys in NC. I actually have no idea why the receptionist even transferred me to him since I didn't ask for him by name and I sound quite young on the phone.
Wow! Let me tell you, when he realized what I was calling about and what my question was, if he could have struck me dead, I think he would have. It was as if his very worst enemy had materialized right in front of him on the phone. You could hear the venom ooze from his voice.
He told me only that the situation was "complicated" before he hung up on me.
I couldn't have offended this man more if I had planned.
So...funny. Also, a little bit sad.
I love your idea about calling a law clinic, though! That's excellent!
Happy Texan - the problem is, there's no fine print for you to read. With PMI insurance, borrowers usually never see an agreement, nor do they even know who their PMI company is. To complicate matters, this information also isn't generally covered in your Note.
Most borrowers only find out who their PMI company is when they reach 80 percent equity in their house and cancel their PMI. At that point, I'm still not sure that the borrower knows who their PMI company is...this might be something that's handled through the mortgage co...not sure though.
The point is, do you know who your PMI company is?
I think there is one "big dog" called, guess what "PMI Group" and maybe another couple of biggies like MGIC & Radian Group, which are tiny comparied to semi-subsidiaries of the big bond insurers like Genworth. It is a very "dark" part of financial service, with a lot of creepy no-way-to-call-us business practices.
It would depend on whether the loan secured by the mortgage is a recourse or non-recourse obligation. If it is a recourse loan, then the lender would have the right to sue for any deficiency on the foreclosure sale; and if the claim were paid by mortgage insurance coverage, the insurer would be "subrogated" to the lender’s right to sue for the deficiency. There are exceptions, however, such as when the mortgage lender agrees to waive the deficiency by accepting a deed in lieu of foreclosure or in connection with a "short sale"; however you should consult with a lawyer for advice on the law applicable to your particular transaction, as these also have traps for the unwary.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
