Snapper <snapper1@[EMAIL PROTECTED]
> wrote:
> atec77 wrote...
>>
http://www.smh.com.au/news/national/repo-men-called-to-stress-belt/2008/04/22/1208742940230.html
> "Mr Mouwad said more home owners were selling their houses before they
> were repossessed, but he said some lenders were refusing to authorise
> sales if the price failed to cover the full mortgage."
> Isn't this is what mortgage insurance is for, for those who are forced
to
> take it out as a part of the mortgage application process?
Mortgage insurance is insurance against the inability of the mortgagee
to service the loan. In effect, the insurance is for the lender but is
paid for by the borrower. It is so that, if the borrower is unable to
meet their obligations under the loan agreement and the property is
reposessed, the lender will be paid an insurance payout related to the
amount by which the residual of the loan exceeds 80% of the purchase
price and dependant upon whether the sale price less all sale costs
exceeds the loan residual. Or something like that...
The idea is that, if someone can't make the repayments, the lender is
insured against a loss due to not getting enough money when they sell
the property. It's not there to help the borrower, beyond the fact
that they get a loan exceeding 80% of the purchase price, which they
would otherwise not be able to get.
> So, the poor ****s, whether they're put in that situation by their own
> deeds or otherwise, cannot win. They can't sell the house but are
instead
> forced out, the mortgagee will flog it and claim on the LMI, leaving the
> dispossed with **** all and a ****ed credit rating.
Not quite. If the sale price minus costs and minus loan residual is
a positive number, the mortgagee gets part of that amount, IIRC. The
lender will, of course, load up their internal "costs" component to
reduce the amount returned to the borrower.
> A sad state of affairs and it's only gonna get worse.
Only for the people who borrow beyond their capacity to repay.
--
Athol
<http://cust.idl.com.au/athol>
Linux Registered User # 254000
I'm a Libran Engineer. I don't argue, I discuss.
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