Mortgage Insurance???
- Thread starter gld42_IHB
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OCCOBRA_IHB
New member
[quote author="gld42" date=1234623713]When a borrower get 80-100% financing, he needs to pay mortgage insurance. Who offer mortgage insurances? if the borrower is default, will the lender take the loss or the mortgage insurance companies? any ideas?</blockquote>
There is no PMI if the buyer puts down 20% as the odds of the owner going into forclosure is very unlikely since they have a lot skin in the transaction. Anything less the 20% the buyer has to get PMI and protects the lender for a short period of time if the borower defaults on the loan. PMI does nothing more than protect the original lender against loss if you defalult. The borrower will continue to pay this until an appraiser can prove ther is more than 20% loan to value.
There is no PMI if the buyer puts down 20% as the odds of the owner going into forclosure is very unlikely since they have a lot skin in the transaction. Anything less the 20% the buyer has to get PMI and protects the lender for a short period of time if the borower defaults on the loan. PMI does nothing more than protect the original lender against loss if you defalult. The borrower will continue to pay this until an appraiser can prove ther is more than 20% loan to value.
tmare_IHB
New member
Which means the borrower will be paying it for a long time in this market, if he or she can find a lender that will take less than 20%. I'd imagine that PMI is getting more expensive and that many of these companies have gone under. Anyone know how these companies are doing and what their underwriting standards are in the current environment?
freedomCM_IHB
New member
i think i posted in another thread that they are tightening up. fico>720 is common, condos have to have a substantial number of owner-occupants, etc
also, the mr. mortgage site has been running down the tightening up.
also, the mr. mortgage site has been running down the tightening up.
A friend's house was a short sale on the market for only a month. They told me they already moved out the house, I was surprised that they already sold the house. No, No. The house is not sold yet, a short sale norally takes about 3-6 months. they didn't know the status of the house, but the lender wanted them out by XX/XX/xx, they indicated that the lender doesn't care if it was sold, because PMI will cover the loss. But the value of the house is 40% lower than the purchase price. PMI could not cover the much. Does anyone know the story how lender handler PMI or short sale?
graphrix_IHB
New member
Warning: Serious ubernerd material ahead. Click at your own risk.
<a href="http://www.calculatedriskblog.com/2007/03/private-mortgage-insurance-for.html">PMI part one</a>.
<a href="http://www.calculatedriskblog.com/2007/03/private-mortgage-insurance-for_22.html">PMI part two</a>.
<a href="http://www.calculatedriskblog.com/2007/07/compleat-ubernerd.html">And the compleat ubernerd found here</a>.
I graduated in the top of my class at the School of Tanta Vive, and I will be happy to answer questions after the reading assignments for the class on PMI has been completed.
<a href="http://www.calculatedriskblog.com/2007/03/private-mortgage-insurance-for.html">PMI part one</a>.
<a href="http://www.calculatedriskblog.com/2007/03/private-mortgage-insurance-for_22.html">PMI part two</a>.
<a href="http://www.calculatedriskblog.com/2007/07/compleat-ubernerd.html">And the compleat ubernerd found here</a>.
I graduated in the top of my class at the School of Tanta Vive, and I will be happy to answer questions after the reading assignments for the class on PMI has been completed.
freedomCM_IHB
New member
Thanks for the lynx!
<blockquote>What you should bear in mind is that the longer it takes to foreclose and market the REO, the more interest accrues, and the more expenses rack up, resulting in higher net losses and thus higher claims paid by the insurer. The insurer has a vested interest in making sure that the process is both timely and efficient.</blockquote>
If this is true, why is it taking so long to get the REOs through the system?
<blockquote>What you should bear in mind is that the longer it takes to foreclose and market the REO, the more interest accrues, and the more expenses rack up, resulting in higher net losses and thus higher claims paid by the insurer. The insurer has a vested interest in making sure that the process is both timely and efficient.</blockquote>
If this is true, why is it taking so long to get the REOs through the system?
tmare_IHB
New member
[quote author="freedomCM" date=1234876215]Thanks for the lynx!
<blockquote>What you should bear in mind is that the longer it takes to foreclose and market the REO, the more interest accrues, and the more expenses rack up, resulting in higher net losses and thus higher claims paid by the insurer. The insurer has a vested interest in making sure that the process is both timely and efficient.</blockquote>
If this is true, why is it taking so long to get the REOs through the system?</blockquote>
I would imagine that their vested interest translates into zero ability to do anything about it and possibly even less desire for the bank to move it through the system.
<blockquote>What you should bear in mind is that the longer it takes to foreclose and market the REO, the more interest accrues, and the more expenses rack up, resulting in higher net losses and thus higher claims paid by the insurer. The insurer has a vested interest in making sure that the process is both timely and efficient.</blockquote>
If this is true, why is it taking so long to get the REOs through the system?</blockquote>
I would imagine that their vested interest translates into zero ability to do anything about it and possibly even less desire for the bank to move it through the system.
usctrojanman29_IHB
New member
[quote author="freedomCM" date=1234876215]Thanks for the lynx!
<blockquote>What you should bear in mind is that the longer it takes to foreclose and market the REO, the more interest accrues, and the more expenses rack up, resulting in higher net losses and thus higher claims paid by the insurer. The insurer has a vested interest in making sure that the process is both timely and efficient.</blockquote>
If this is true, why is it taking so long to get the REOs through the system?</blockquote>
Let's see....10x fold increase in foreclosures + less staff = snail pace
<blockquote>What you should bear in mind is that the longer it takes to foreclose and market the REO, the more interest accrues, and the more expenses rack up, resulting in higher net losses and thus higher claims paid by the insurer. The insurer has a vested interest in making sure that the process is both timely and efficient.</blockquote>
If this is true, why is it taking so long to get the REOs through the system?</blockquote>
Let's see....10x fold increase in foreclosures + less staff = snail pace
freedomCM_IHB
New member
that all sounds good, until you get to part two of her post:
<blockquote>This may answer the questions some people had about how the insurer and the lender might be somewhat differently motivated when it comes to mitigating losses on a loan. The MI will be pushing for collection efforts, forbearance, modifications, and so on, whenever it?s prudent (in the MI?s perspective), because the MI pays first in a foreclosure and doesn't want to do so unnecessarily. The lender might want to foreclose sooner rather than later, because in an early foreclosure, most losses are likely to be covered by the MI. Who gets its way is a question of how the fine print in the policy reads. The lender/servicer is not obligated by law to follow the MI?s requirements. It is obligated by sheer self-interest: <strong>if you don?t follow the MI?s servicing rules, the MI won?t pay the claim.</strong></blockquote>
So are the MIs going to not pay the claims from banks that are sitting on REO inventory?
<blockquote>This may answer the questions some people had about how the insurer and the lender might be somewhat differently motivated when it comes to mitigating losses on a loan. The MI will be pushing for collection efforts, forbearance, modifications, and so on, whenever it?s prudent (in the MI?s perspective), because the MI pays first in a foreclosure and doesn't want to do so unnecessarily. The lender might want to foreclose sooner rather than later, because in an early foreclosure, most losses are likely to be covered by the MI. Who gets its way is a question of how the fine print in the policy reads. The lender/servicer is not obligated by law to follow the MI?s requirements. It is obligated by sheer self-interest: <strong>if you don?t follow the MI?s servicing rules, the MI won?t pay the claim.</strong></blockquote>
So are the MIs going to not pay the claims from banks that are sitting on REO inventory?