When you failed to make your payments your lender probably filed a claim with the PMI company. The PMI company may pay off that claim with your lender and the lender may then sell the loan to a new lender.
That new lender then has the right to collect from you the full amount owed under the loan. In some cases, if the PMI company paid off the claim, the PMI company could come after you for the repayment of the amount paid to the first lender for the PMI claim.
There are some exceptions in which the homeowner might not have to pay the full amount of the loan back to the lender. One of these exceptions is when the borrower files bankruptcy and all or part of the loan debt is released. Every situation is different and I advise that you ask questions to all parties involved to get a complete understanding that is specific to your situation. I hope this helped. Good luck to you.
Great Post! I saw that episode as well.
Maybe we should add a disclaimer here. News is ALWAYS sensationalized to get the readers or viewers to read or watch.
That being said, Stretegic Default is something the banks are fully aware of.
They have now changed up their processes, because of these types of transactions.
It is the "WHY" we are hearing that foreclosures are on hold, and now the sensational news about where the market is going has everyone panicking.
It is always easier to point the finger at someone else when we fall on hard times. Than it is to take credit or sometimes the blame for our own actions.
Think about it, the systems that have been put in place, have been placed there to help real people in real trouble. They were not created to help manipulate a bad situation and make it even worse.
If you are interested in knowing about the ramifications of Strategic Default, and many other processes out there for you to use, or if you have found yourself in trouble or behind in your mortgage payments. IN default of your first, second (PMI), third (Taxes) or Homeowners association, and aren't sure about what to do, please logon to either my website at: http://www.MadewithSchade.com
or Martin's Website at:
For a complimentary, confidential consultation... We are here to help you!
By the time their credit clears up enough to be able to buy again, they have banked so much money that they will have a sizable down payment for the next property.
This sounds great in theory, but who do you think is walking behind the elephant down the parade route with a shovel. Yes, it is all of your neighbors. We aren't even close to the end of the mortgage meltdown, full of legitimate cases where people that did everything right, and still are, or were unable to hang onto their homes.
I hope that you find a way to make this work,
Mortgage Loan Originator
So the pmi company will not help you, you will look at other options.
First Weber Group
Certified Distressed Property Expert
I hate to be the bearer of bad news. but...
You signed the mortgage paperwork, so you are responsible to pay back that debt. You cannot just decide to stop paying because the rest of the homes in your neighborhood or development have lost value. The PMI that you have on the property is in case of your default, but not by a chosen default. That being said, your student loans are not a reason to stop paying on your mortgage. The banks would not consider this to be a viable reason to default on your loans unless there was some life altering situations; divorce, illness, lack of income due to layoff or some other type of situation other than choice.
The fact that your home is not worth what you paid for it is not a reason to stop paying the mortgage.
To answer your questions:
You will have potentially 4 loans associated with the home.
1.) The first mortgage
2.) The PMI or second mortgage
3.) Any homeowners association.
Each of these loans become what is known as liens on the property.
And when it comes to repayment or default thereof, they each take their rightful place.
Taxes take first, HOA takes second, First mortgage takes third and pmi or second mortgage take fourth and they all are placed against your credit if you choose not to repay the debts.
Short sale is an option, Deed in Lieu is an option, foreclosure is an option.
I would seek the advice of a good Foreclosure attorney and tax advisor.
If you are in need of a referral please feel free to contact me at (224)267-5472 or Lisa@MadewithSchade.com
Waukegan has been hit very hard by the housing crisis and attempting to sell your home rather than not work with the bank. Get a real estate attorney that specializes in bankruptcy and short sale, call your bank and maybe you can forestall the foreclosure and live in your home longer at no additional expense.
http://www.irs.gov/individuals/article/0,,id=179414,00.html (you may have to copy and paste) it is information on the
Mortgage Forgiveness Debt Relief Act and Debt Cancellation Act,
2)Try a short sale with a short sale experienced Real Estate agent, better than a Foreclosure for your future credit score. If you need a list of short sale agents let me know.
The first thing to do is to contact the bank and request a short sale package. have a well written hardship letter describing your circumstances. Even so, the bank might not play ball since they have the PMI to cover the 20% gap between the mortgage and your sales price. I have heard that banks will let the house go to foreclosure rather than work with the owner. Find a good bankruptcy and short sale attorney, maybe you can do a deed in lieu of foreclosure. Last bit of bad news is that Illinois is a recourse state, meaning they can come after you for the defeciency, The cost of a lawyer is money well spent! get a good lawyer to help you minimize the damage. Walking away is not a good option, get the legal counsel and follow their advice!
First Weber Group
Certified Distressed Property Expert