How could a mortgage company in bankruptcy?

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I understand that to be “sub-prime loans left and right foreclosed, and I understand why. But what I do not understand: If I get a mortgage “subprime for more than 80% of the value of my house, I am also paying PMI – private mortgage insurance. Literally, I am for my mortgage company to insure against loss, they pay, if I default on my mortgage begegnen.Also if I default, the mortgage company to my house and sold it and made Then an insurance claim (against the policy, I paid over time) against a net loss. So when they lose – they make money when I pay my bill and they do not lose money if I did not – then how can it fail?

3 Comments
  1. Reply
    Pobept K
    May 3, 2011 at 2:38 am

    Sure they can.

  2. Reply
    thebigm57
    May 3, 2011 at 2:53 am

    Not everyone has PMI…Mortgage companies don’t want to own or manage properties…they want the cash. Foreclosure means they own a property and incur all the expenses associated with maintaining it. Mortgage companies don’t want this overhead and often have to sell the property to recover something/anything they can. In the end it’s often not enough to cover their loan so they end up bkrpt. PEACE!

  3. Reply
    Mortgage Expert
    May 3, 2011 at 3:14 am

    PMI insurance is only charged on prime loans. You do not have PMI insurance on sub-prime since they charge higher rates for any additional risk that they are taking at higher loan to values. The reason that PMI is charged on prime loans is because instead of paying a higher rate at say 90% you get the same low rate as the 80% loan but pay PMI for the additional risk taken on by the lender.

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