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What happened to all the MIP (Mortgage Insurance Premiums) required on a mortgage with less than 20% down payment?? Isn't MIP designed to pay the lender in case of borrower default??
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MIP/PMI covers the original amount above the 80% loan to value. So it is assumed (ass-u&me)that the lender sells the house @ auction after foreclosure for 80% of the original value, then get their addition $$ back from the PMI/MIP company. This 20% max does very little when the value @ auction is 50% of original value.
Being in mortgages for over 15 years, I can tell you that when employed, perfect credit borrowers have no options on a refinance, that the sytem is broken. You can complain all you want about fairness-I agree, but the problem is picking up steam and no one has the perfect answer.