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So Debsi, in the case that the bank is actually made whole by their PMI claim, I am assuming that they cannot come after the mortgagee for a deficiency.... I would think that that is double-dipping?
And if they didn't truly experience a loss because they were made whole, I don't think that it would be appropriate to report a loss and 1099 you either, no?
However, it's becoming clearer that the PMI company could come after you for the money spent.... but would a claim against you by the PMI company be considered a "deficiency"? Could you still be 1099'ed considering you didn't settle a loan for a lower amount with the PMI company specifically?
Again... all hypothetical questions... so feel free to throw in any other ideas or variables.. but I'd love to see what the possible outcomes could be.
Thanks!
Once again - the mortgage insurer may be subrogated to the bank's rights and be able to sue the defaulting borrower for the sum paid to the bank by the insurer. It's not a deficiency judgment awarded to the bank - it's a subrogation claim prosecuted by the mortgage insurer.
Thanks for your questions and answers, hypothetical or real. I am facing something similar three years after losing my house. I had to move for work and couldn't sell it, right in the middle of the crash. Anyway, the mortgage co is the one coming after me for a deficiency. I know things weren't handled correctly, lots of shady stuff went on with the foreclosure. Anyway, I had pmi which added about $100. a month to my payment. I asked about what it was, but I never saw a policy. The name is even obscure something like Primary Mortgage Insurance Co. whatever. I know nothing about it and am facing bankruptcy after four years of pulling myself up from the mess all because of this deficiency in which the bank was paid.... If that ain't double dipping, then I don't know what is? Yes, it would have been much better to have paid the mortgage as I agreed, but I chose to save myself instead of the house. There is a story in each foreclosure and it could happen to anyone should life events occur that no one is quite prepared for. So, I am wondering if I can fight it? How is it legal for the mortgage company to collect twice? I do understand somewhat if insurance didn't cover the loss. Did I mention that the bank is one of the banks who are paying out mega bucks for improper foreclosure practices and I was just informed that I may receive some compensation for the way mine was handled. Crazy stuff, all of it. I probably will never own property again though I have worked for over 30 years in a professional field fulltime. Any serious tips are welcome. Catching my breath in Tn.
PMI protects no one but the lender. Period. It 100% belongs to the lender and no one else is entitled to see that policy. No one is entitled to the proceeds of the payout of the policy except the lender.
If a borrower defaults, the PMI rarely covers 100% of the lender's losses. It only covers a certain percentage.
If a borrower has their MI removed during the life of the mortgage, the insurance will no longer pay out. On an FHA loan, the MIP is present whether the borrower pays it in their monthly payment or not.
A borrower need not be paying PMI in their payment for PMI to be present. Lenders will often obtain PMI on pools, or groups, of mortgages.
If a loan goes to foreclosure, there is a 100% chance the file will be audited by both, the lender and the PMI company. Now that FC have slowed down, the audits are fairly extensive and no longer the quick audit of year's past.
If FHA MIP is present on the loan, it will be at least 3 years from the date HUD paid out on the claim before that borrowers will be eligible for another FHA loan. Some claims can be 18 months after the FC before it is paid.
I am going through something similar with PMI. I had a property that was foreclosed back in 2009 in Homestead, Florida. In June of this year (2014), PMI decides to come after me for a deficiency judgment of little more than $38,000.00.
Well to their surprise I still had my closing documents from 2005. I was able to pull my PMI Disclosure Document where it clearly explains the why PMI was required for my mortgage. However, it fails to say that I am responsible for any deficiencies or moneys in case of default or that they have the right to come after me for any amount.
So, I went to court on June 16, 2014 for a hearing and I now have a second hearing scheduled for October 22, 2014. So far so good. I think I have a good chance at winning this one. They have no grounds to stand on.
I guess they thought I had no closing documents anymore. Thank God I kept those.
Does any one know if there is a statute of limitations in Florida for PMI to come after me. Thanks. Good luck to all!!
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