Bellevue Short Sales: I Have Mortgage Insurance. Won't That Cover The Deficiency?

Bellevue WA – The Stop Foreclosure Institute recently received a question from Max. Here is Max's Question.

"If I pay mortgage insurance and default on my loan, wouldn’t that cover the deficiency amount? Max."

Click here to discover how other sellers successfully did a short sale and avoided foreclosure.

Here is our answer to Max's Question: Yes, the Mortgage Insurance should pay your lender for any loss. So that reduces the amount that your lender will lose on the short sale.

There are a couple of problems. Many Mortgage Insurance Companies have gone bankrupt. They can't pay on their claims.

In this situation your lender may or may not pursue you for the loss.

(I've written extensively on deficiencies on other blog posts. In 60-75% of all short sales, you won't owe a deficiency. E-mail me at paulandc@yahoo.com and I can research your specific situation.)

The other problem is that many Mortgage Insurance Companies have terms written into the mortgage that they can pursue you for the loss.

They are more aggressive with trying to be repaid. In the few short sales we have negotiated and the lender asked for a promissory note, the person requesting it usually was the Mortgage Insurance Company.

But, they only ask for a promissory note about half the time. In addition, the promissory notes are usually for an amount lower than the loss.

For example on one short sale, the loss was around $59,000. The seller agreed to a promissory note of $10,000 to be repaid over the next 10 years with Zero Interest. Their Monthly Payment was $83.33.

We won't know if they will ask for a promissory note until the short sale is in progress. If you know you have Mortgage Insurance, then you need to find and aggressive short sale agent.

They will work to get an promissory note or deficiency waived. Thinking about a short sale?

I can help you short sale your property and get back on your feet. Send me an e-mail at paulandc@yahoo.com. I will contact you for a free consultation.

When we talk, I will explain how the process works in detail and answer any questions you may have. Or, if you prefer, you can call me at (206) 261-7355

Discover how other sellers successfully completed a short sale and request a free consultation by clicking here.

Thinking about a loan modification? Our Bellevue loan modification kit has the instructions you will need to get a loan modification approved with your bank. Click here to request a copy.

Thanks for reading this, Paul Nelson