Foreclosure in 60085>Question Details

Cali2223, Other/Just Looking in 60085

Has anyone had or heard an experience where the bank or PMI company pursues a deficiency judgment on a loan with PMI?

Asked by Cali2223, 60085 Wed Sep 8, 2010

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As the other agents who've answered said, the answer is Yes they can. They're correct in saying that the PMI companies are "on the Hook". If you're in a situation getting close to a foreclosure, it's possible to try a short sale option, and have, an attorney working with you and your agent, to assist in negotiating a release from further financial obligations, in a actual foreclosure the release is less likely to happen. Best of luck and feel free to contact me with questions.
0 votes Thank Flag Link Mon Nov 29, 2010
Hi Cali2223-
All three loans have the ability to come back or pursue a deficiency. The first, the Second, the HOA, and the PMI. Illinois is a recourse state, It means that IF the bank allows a short sale they still retain the right to pursue a judgment for the ramaining deficiency. In a Foreclosure each lien takes its rightful place in the repayment schedule. Each bank has its own standard operating procedure as to what they will and can allow.
Sometimes, they will allow to waive that right in negotiations of a short sale.

For credits sake, it is best not to allow a foreclosure sale. Foreclsoure stays with you much longer on your credit report than a short sale. In a short sale, once the debt is payed off, it shows on your credit report, as debt PAID IN FULL, or a negotiated settlement. It will not appear the same as a Foreclosure, which presents itself on your credit report as a refusal to repay.

If you'd like a complimentary consultation to observe your options, please feel free to contact me at (224) 267-5472 or Lisa@MadewithSchade.com

It is in your best interest to seek legal advice from both a tax advisor and a foreclosure attorney. If you are in need of a referral to either please feel free to contact me at (224)267-5472 or Lisa@MadewithSchade.com
0 votes Thank Flag Link Sun Nov 21, 2010
The bank is doing the seller a "favor" by allowing a short sale and taking less than is borrowed. Both short sales and foreclosure proceedings the bank has the right to come after you for the balance of the shortage. First, the seller has to have a legitimate hardship to process a short sale. Death of spouse, divorce or loss of job or serious medical bills. So having a good hardship letter and rationale for asking the bank to approve a short sale is the first step. Even if you have an approved short sale, legally we are talking about getting a release from the mortgage, the bank wants to know about how you plan on handling the deficiency due to the bank, then we are talking about a bank satisfaction letter. Often the seller's attorney will try for a zero deficiency satisfaction letter from the bank. The bank might take 50% of that amount as a write-off and want the seller to pay over 10 years a non collateralized loan for the balance. As was mentioned, Illinois is a recourse state meaning they can send a collection agency after you for the deficiency amount.. Having a good attorney is key to getting favorable terms on the satisfaction terms of the shortage. Sometimes what actually happens is the seller agrees to a repayment plan and declares bankruptcy after closing and this non-collateralized loan goes away. You must get to an attorney and see how far down this path you are already and what makes sense for your situation.

Best of Luck!
0 votes Thank Flag Link Thu Sep 30, 2010
The pmi is the one on the hook for the loss and they will do what they can to mitigate their loss. The bank will assign their deficency right to the pmi so the PMI can collect. The PMI companies losses have been huge! So if the sales price and state laws allows the pmi to mitigate their loss, they will be in the negotiation to maximize the loss reduction.

Keith Manson
First Weber Group
Certified Distressed Property Expert
Milwaukee Metro

http://www.milwaukeebailout.com
0 votes Thank Flag Link Sun Sep 26, 2010
Yes, I have heard of that, too.

Illinois is a "Judicial" and/or "Recourse" state so that is not uncommon. Banks are also able to do that with short sales & foreclosure properties.

I recommend you speak with an attorney who is familiar with your situation....they would be able to give you legal advice & options.

Good Luck!

Laura Karambelas SFR, CREN
Short Sale & Foreclosure Resource Agent
0 votes Thank Flag Link Wed Sep 22, 2010
Yes. It happens all the time.
0 votes Thank Flag Link Tue Sep 21, 2010
I agree with the comments so far, a definitive yes. This is something that will become more and more prevalent as we move forward in these uncertain times and more folks short sell in the future and more folks that have already taken advantage of a short sell learn the full ramifications of this method of getting out from under their obligations. Jim, Home Savings of America. 703 591 5626 ext 419.
0 votes Thank Flag Link Thu Sep 9, 2010
Hi Calli,

Yes. You will want to confirm if the 'debt' is recourse or non-recourse. If the debt is legally non-recourse then the lender, creditor or pmi company does not have the legal right to collect the debt and cannot file a lawsuit in effort to obtain a judgment against you. However, if the debt is recourse debt, if the 'debt' is legally your obligation then yes the creditor can attempt to collect from you and the remedy is to take you to court and sue you for a deficiency judgment. You also have an opinion and can go to the court house in order to plead your case and try to get the Judge to throw out the case. Good luck!

Hannah Fliegel, FICO Pro
0 votes Thank Flag Link Thu Sep 9, 2010
The PMI companies will assess if the seller has the ability to repay this debt now or if it is likely in the future. If they have no ability they take a closer look at how much they will receive if the property goes to foreclosure. PMI does attempt to collect the most possible money and limit their losses anyway they can. It is best to negotiate the deficiency while you are negotiating th short sale.
0 votes Thank Flag Link Wed Sep 8, 2010
I recently negotiated a short sale on a property with PMI. We did get the short sale approved, however, the PMI company required a $50,000 promissory note from the sellers payable over 25 years with 0% interest. With payments on the note of $167/month, the homeowners felt it was well worth it to be out from the burden of dealing with the property or having a foreclosure.
Web Reference: http://kaperproperties.com/
0 votes Thank Flag Link Wed Sep 8, 2010
yes, PMI is on the hook for the value to 80% LTV and they don't jsut walk away.


Scott Riddle, P.A.
Realtor Certified Short Sale Professional
Realty Direct| 4500 Executive Dr., Ste 320 |Naples, FL 34119
E-Mail: ScottRiddle239@gmail.com
Cell: (239) 289-1849
e-Fax: (239) 390-0027
Web: http://www.NaplesRealestateTeam.com & http://www.NaplesRealtorPros.com & http://www.NaplesRealEstatePros.com
0 votes Thank Flag Link Wed Sep 8, 2010
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