FOR REALTORS - LPMI
Aloha,
Several years ago I wrote a blog faithfully until it became apparent the only people reading it were REALTORS. I guess I'm just boring! Things are happening so fast in real estate now, even the most astute agents are blind sided regularly. Here is an example:
One of my agents in FL asked me if I know about LPMI, Lender Purchased Mortgage Insurance. Yes well, kind of, just a little. Lenders have been hedging their bets for years. It was part of the horror we discovered when the financial world almost collapsed a couple of years back. More specifically mortgage lenders often require borrowers to pay for PMI, Primary Mortgage Insurance. Sometimes instead of making the buyer pay the cost, it is rolled into the cost of the loan and is expressed in points and/or increased interest rate and the lender actually purchases an insurance policy to cover his potential losses.
For several years I've been asking, what about mortgage insurance and short sales? Does an insurance company cover the lender's loss in a short sale? If so, can the insurance company come back to the seller for a deficiency judgement in a short sale the way they can in the event of a loss through foreclosure?
So to finish the Florida agents news, she is working on a short sale. The investor purchased mortgage insurance without the knowledge or consent of the homeowner. Now the bank will not approve their short sale because the mortgage insurance will not accept the terms of the short sale contract. It appears they prefer to "kick it down the road" and postpone payment as long as possible by letting the property go through foreclosure.
If you are a REALTOR or buyer/seller of a short sale property you may want to know more, LPMI - Lender Purchases Mortgage Insurance. Although this is just the latest wrinkle in the short sale roller-coaster, there is a lot more information about LPMI online. LOOK IT UP!
If you have had an experience with LPMI and a short sale, PLEASE SHARE!
Sincerely,
Joyce Murphy RB
Kona Homes Inc. & Luxury Real Estate Florida Inc.