Wow! That would explain why they listed it for sale at so much less than what was owed and the market value.
I wonder how many homeowners have gotten shafted and now that I think about it, is that insurance payment a tax right off for the homeowner?
BTW. When I went to a couple public auctions to find people in the know and see how things work, I head alot of people telling each other how they handed their bank the keys and walked away and were at the auction to buy a less expensive house including the one they walked away from.
Mike H wrote:
Lately, banks are letting houses go on the Court House steps for much less than is owed. The reason is simple, the borrower was required to take
out mortgage insurance so the lender will get paid off by the insurance company (AIG?) for the difference between what it sold for and what was owed. This is what happens during a down market and that's why mortgage
insurance is required when a borrower puts down less than 20%.
This is also the reason why many investors don't want to modify a delinquant loan. If the investor simply lets it go through foreclosure, he or she will get the full amount originally owed, partly from the sale and the rest
from the mortgage insurer. Mortgage insurers are taking a beating right now
and many are on the verge of bankruptcy. Many never saw the crash in real
estate coming so they got caught off guard.
The foregoing fact is leading to many people intentionally defaulting on
a property loan so they can liquidate the debt, and buy back the property
or one like it at a much cheaper price. It's simple economics and that's why
Mr. Obama's loan mod plan probably won't work for most mortgages.