Do you pay mortgage insurance and you’re in a position where you may need to short sell your home?

I just received a question via email from a homeowner who is upside-down on their mortgage: "If I pay mortgage insurance and default on my loan, wouldn’t that cover the deficiency amount? “Max R."

Here was our answer to Max's Question: Yes, the Mortgage Insurance should pay your lender for any loss. So that reduces the amount that your lender will lose on the short sale.

But, There are a couple of problems. A few Mortgage Insurance Companies have gone bankrupt and many are having financial hardships. They can't (timely or fully) pay on their claims. In this situation your lender may or may not pursue you for the loss.

The other problem is that many Mortgage Insurance Companies can pursue you for the loss they take. They tend to be more aggressive with trying to be repaid. In the short sales we have negotiated with mortgage insurance involved, a large percentage of the time the Mortgage Insurance Company asked for a promissory note or cash payment from the seller.

For example on one short sale, the loss to the Mortgage Insurance Company was around $59,000. The seller agreed to a promissory note of $10,000 to be repaid over the next 10 years with Zero Interest. Their Monthly Payment was $83.33.

We won't know if they will ask for a promissory note until the short sale is in progress. If you know you have Mortgage Insurance, then you need to find an assertive short sale agent with experience in negotiating with Mortgage Insurance Companies.

We can help you short sell your property and get you back on your feet.

 Call me on my direct line at 561.602.1258, Thanks for reading…Steve Jackson.