Foreclosure in Detroit>Question Details

AB6296, Home Buyer in Bowie, MD

I recently had a fire that destroyed my home. My insurance proceeds will just barely cover me relocating to a new home (which is necessary due to the

Asked by AB6296, Bowie, MD Mon May 17, 2010

safety of my existing neighborhood). My mortgage principal is 85k including a heloc. However, homes in my neighborhood have depreciated gratly and selling for on average between 10k-40k. Is there a way to negotiate with my mortgage company to get a principal reduction so that I may pay off the mortgage and avoid foreclosure?

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3
Louis Peasley’s answer
Your mortgage company requires an escrow that pays for fire insurance that covers the balance of the mortgage and names the mortgage company as the beneficiary of the fire insurance, regardless of the market value of the property. The insurance company will pay the mortgage company directly.
0 votes Thank Flag Link Tue May 18, 2010
The money the insurance company gives you covers the repair or replacement of the home that was insured, the mortgage company requires you to have that insurance to protect their interest and if you start doing other things with that money you will put yourself in an insurance and mortgage fraud situation you better be careful.
Good Luck
Bob Patrick
Buy a home after foreclosure expert
0 votes Thank Flag Link Tue May 18, 2010
Not sure about your insurance policy, but isn't the point of insurance to replace the home to what it was prior?
I'd say there is NO way they can rebuild the home for $10-40k, if that is what is necessary?
I'd seek further legal advice.
0 votes Thank Flag Link Mon May 17, 2010
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