Can PMI be taken out by Mortgage company?

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If you close on your loan and have no listing of PMI or disclosure in your mortgage paperwork, can a mortgage company take out thier own insurance against you and your property without your knowledge?
If so and a default on the loan takes place, the PMI pays the mortgage company then the borrower is now stuck with that debt they did not originally agree to?
Yes, actually I had broker then a title company and an attorney read my paper work. there was no call out for PMI. The attorney is at a loss to if they can insure it then selves and stick me with the debt. he has never heard of this type of action before. Maybe it’s a loop hole? I’m very frustrated.
MBcratz,
that is understood. PMI is either LPMI or BPMI. So I have never heard of impairment insurance. Are you saying a mortgage company can add this at anytime they want and you are on the hook for it?
mbrcatz> Just did some reading on mortgage impairment. According to a the definition it is strictly for Title insurance purposes. Basically it covers the new mortgage company whom assumes they are the primary lien holder on the deed during title requirements. This insurance is supposed to only cover in that aspect.
Next> Forced insurance according to federal law would be if I didn’t pay my hazard policy. A mortgage company can force hazard ins, but must remove it as soon as the borrower sends the info to the lender that they have coverage.
I’m not saying you are wrong on all aspects, but do you know which companies may uses impairment as forclosure coverage? IE which PMI companies?
Clarification: Found the PMI companies offering it. Mortgage impairment is a hazard coverage for both Title and forclosure purposes. Meaning it is not tied to forclosure, but is a hazard policy to protect the lender incase the borrowers policy is not covering the property during forclosure. It is not LPMI that is different.
MORTGAGE IMPAIRMENT coverage protects your lender/mortgagee’s interest when you are unaware of a lapse of insurance coverage, and a loss occurs to the mortgaged property. You remain covered so long as

*the borrower (mortgagor) does not make the customary mortgage payment on the due date

*you have taken all customary steps, other than foreclosure or sale, to collect the unpaid loan balance, and

*you have not released the mortgagor or other parties from payment because of loss or damage to the mortgaged property
J. B. Lloyd mortgage impairment coverage is available in the following formats:

1. Checking basis. The lender must continue to track all insured properties for renewal status of insurance policies and procure coverage (i. e. “force place”) when it is discovered that there is no coverage in force

2. Ex-checking (Exceptions-only) basis. The lender is not required to track renewals of insurance policies, but when it is discovered that there is no insurance coverage in force, it must procure, or “force place coverage”

3. Ex-checking with deletion of insurance procurement requirement. This basis of coverage relieves the lender of procuring insurance coverage when it is discovered that there is no insurance coverage in force. Note claims are only paid with this option if the loan goes into default.

Balance of Perils coverage is also available as a Mortgage Impairment option. This coverage protects the lender in the event of a loss where coverage was not required
Just to make this clear. I called the PMI company directly. They stated “the mortgage company added or bought LPMI against my 2nd Deed and Trust. They also stated that both them “insurance company” and the mortgage holder are not required to send me any information that this took place.
Meaning, although I signed up for an 80/20 with NO BPMI or LPMI it was placed outside my loan behind my back. I am going to call the INS company tomorrow and ask when the policy was started.

3 Comments
  1. Reply
    Focused
    April 29, 2011 at 9:39 pm

    Did you read the loan agreement in full? Mortgage companies have many ways of pulling money that should not be taken. For instance, back end points (discount). Prime Mortgage Insurance, generally is required if you have less than 20% equity in the property. To answer the question, no, a mortgage company cannot take PMI if it is not declared in the contractual agreement. If such insurance was taken without your knowledge, refer to a licensed real estate attorney to review the contract. It may cost a couple hundred dollars, but better than paying hundreds per month for PMI.

  2. Reply
    mbrcatz
    April 29, 2011 at 9:48 pm

    If you have a standard mortgage, and put less than 20% down, you WILL have PMI added to your mortgage, but it’s paid for by YOU, not your mortgage company.

    PMI should have been included with your escrow amount, but EXCLUDED from your good faith estimate – it’s neither principle nor interest.

    The insurance that the mortgage company takes out, is called mortgage impairment (sometimes called forced placement), and it gets charged to your account. PMI is completely different.

    It doesn’t matter if mortgage impairment pays the bank, or if PMI pays the bank, NEITHER pay on behalf of the borrower – the borrower STILL owes the money, even if PMI paid the bank back some of that money.

    ie, you pay for PMI, but it will never benefit YOU.

  3. Reply
    car253
    April 29, 2011 at 10:28 pm

    This is the wrong category. But you still got some great answers.

    You might repost under “real estate”.

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