real estate finance - full book (500 pgs)

Real estate finance full book(500 pgs)

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: ing guidelines are met and the PMI company will issue the requested coverage, the originating lender will be notified by phone, and later a written confirmation of the approval will be furnished. This underwriting procedure will normally take only 1 or 2 days. One can see that the underwriting by the PMI companies is a great deal faster than that of FHA, which can take many weeks. CLAIMS PAYMENT When a lender has notified the PMI company that an insured loan is in default as per the procedures of the PMI company, the insuring company has two ways of handling the claim. First, the company can pay the lender the full amount of the remaining loan balance. If this is done, the PMI company will take title to the property and then dispose of the property. Second, the PMI company can pay the lender as per the coverage purchased (20, 25, or 10 percent of the loan balance) plus other expenses in the policy of the PMI company, and the lender will then dispose of the property. Dynasty School (www.dynastySchool.com) 6-23 REAL ESTATE FINANCE Claims under insurance issued by a PMI company are handled differently from claims filed against FHA mortgage insurance. The FHA will pay the lender the outstanding loan balance either in cash or debentures secured by the United States Treasury and FHA will take the property. If a foreclosure occurs on a property that is insured, the PMI company either: Pays off the lender in full and takes title to the property, or Pays the lender in accordance with the insurance, usually 20 to 25% of the principal balance plus certain expenses. The lender then keeps the property and is responsible for selling it. BENEFITS OF PMI COVERAGE There are many benefits for both the borrower and the lender with the purchase of PMI coverage. Advantages to the lender – 1. 2. 3. 4. The PMI insurance allows the lender to make 90 and 95 percent loans and to sell these loans in the secondary market. With the ability to make higher loan-to-value ratio loans, the amount of possible loans is expa...
View Full Document

This note was uploaded on 12/30/2010 for the course SOC 101 taught by Professor Zhung during the Spring '10 term at Punjab Engineering College.

Ask a homework question - tutors are online