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PLEASE LOOK INTO THIS MUCH CLOSER. I AM A MORTGAGE LOAN OFFICER, AND HERE'S
WHAT i KNOW ON THIS TOPIC.
PMI is an insurance program where the FHA insures the bank (lender) against
a loan default. What FHA pays is the shortfall in what you owe and what the
bank gets when the sell the property. Let's say you owe 100,000 on the
remaining mortgage when you default. The bank takes the house back and sells
it at a foreclosure sale, and gets 90,000. There is a shortfall of 10,000
that the FHA covers via the PMI insurance.
THE REALITY
You want to avoid foreclosure at all costs if you can. You did not tell us
when you bought the unit, but if you bought it more than 3 years ago, you
should have equity that bears (bares) protecting. I am in Calif., and have
little feel for what is happenting in your state, so I've little idea what
sort of equity you may have. Assuming you have equity appreciation, you can
sell the unit on your own at below market value but above your equity
threshold. If you have 50,000 in equity appreciation, and the current sales
are slow at that level, then offer for sale at a price that reflects 35,000
in equity appreciation. Assuming you sell at this price, you beat the
foreclosure proceedings and protect the vast majority of your equity
appreciation.
ANOTHER STRATEGY
Your bank also knows the market is soft, and they want the money, not the
property -- the first rule of lending is that the bank never wants the
property, they always want the money.
Sometimes the bank will allow you to make an Interest Only payment instead
of a full payment. Without the terms of your loan, it is difficult to give
an illustration, but let me make a simple point here. Assuming a 6.500%
interest rate, and 250,000 initial loan amount for 30 years, you would have
a payment of just under 1500 each month. If you could pursuade the bank to
accept an Interest Only Payment for a closed-end period, say 6 months, the
payment would be 1354, which would save you about 150 each month. If this
would help you keep the unit, the bank might accept your terms. They might
recast the note at the end of this to adjust the payment to recapture the
shorted pricnipal and still have the loan paid in full at the end of the
original term.
"Diane Oberman" <poncholuv@webtv.net> wrote in message
news:21792-44F4C892-1090@storefull-3238.bay.webtv.net...
> Has anyone had this experience? Due to financial and recent medical
> problems I need to get rid of my condo. Here in CO they is just a glut
> of homes for sale. No luck. Have an FHA insured loan. Paid an upfront
> fee for ins. and $57 a month PMI. If I walk away, will FHA cover the
> difference between what I owe and what it sells for? I'm on SS and a
> retirement check, do they come after you and take that? any info would
> be appreciated.
> Diane,
>
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Re: Foreclosue
