What is Mortgage Insurance And It's Affect On Processing Short Sales?

What is Mortgage Insurance?                        

Mortgage insurance is a financial guaranty for the lender that will help to reduce or eliminate a loss in case the borrower defaults on their mortgage. MI is almost universally required on loans where there is less than twenty percent equity. That means if you are purchasing a home with less than twenty percent down or refinancing to more than eighty percent of your homes value, you are going to be required to pay mortgage insurance. To be put simply, mortgage insurance spreads the risk between the lender and the insurance company.

The Two types of Private Mortgage Insurance

Borrower-Paid Private Mortgage Insurance (BPMI) – This is default insurance on mortgage loans paid for by borrowers.

Lender-paid private mortgage insurance – This is similar to BPMI except it is paid for by the lender. The lender will go ahead and insure themselves if they feel it behooves them.

How can this affect a short sale transaction?

When processing a short sale with one of the loans having Mortgage Insurance the file will have to be reviewed by not only the       For the entire article click here