Posted by JT-IN on November 11, 2006 at 17:12:20:
Jeff:
I wouldn’t say that it dramatically helps… I have seen it help, when the PMI agrees to pay the claim in advance of foreclosure, in other words, they “throw-in” the policy, thereby paying the claim. However, depending upon the value of the property and loan amount, I have seen PMI be more of a deterent for a lender to work out a deal, than not. Each lender seems to have a different slant on this.
The good thing is that at least the first 10 or 20% of the loss is absorbed by the PMI company, making it a little easier for the lender to give a little when necessary. Also, inventories are growing for lenders, so there attitudes are changing as well. The days of buying it back at sale, regardless of the exposure, and cashing in without hardly a loss, are pretty much a thing of the past. They are beginning to understand that when they have a buyer before them, maybe it makes sense to go with a workable plan, and move onto their next problem.
JT-IN