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Sam · Posted: Thu Apr 08, 2004 4:59 am Post subject: Insured Mortgage

Insured mortgages are mortgages insured either by the Federal Housing Administration (F.H.A.) or by private mortgage insurance (P.M.I.). In the incidence of the borrower defaulting on the loan, the insurer has to pay the lender either the amount of loss incurred or the amount insured-whichever is lower.

FHA loans:
The Federal housing administration, a federal agency within the US Department of Housing and Urban Development insures mortgages. This implies that on default by any borrower, the FHA insurance protects a lender from financial loss. The FHA loans are meant for moderate and low income borrowers who wish to purchase homes or refinance their current mortgages.
PMI or Private mortgage insurance:
Homeowners taking a loan amount equal to or more than 80% of the property value, are required to pay for private mortgage insurance premiums. The PMI helps lenders to compensate for any loss incurred in case of default by the borrowers.

Guest

what is this pertaining to insurance is that the same as PMI?

Guest

Yeah it is more or less related to PMI only.

Guest

How would this fit in with loan modification? Does the lender reduce the principal amount ?

Niicss · Posted: Tue Apr 13, 2010 3:55 am Post subject:

If you've a mortgage insurance, then the lender will try to recover the balance dues from that insurance. If your principal amount is reduced, the lender may be able to get back the forgiven amount from your insurance company.

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Insured Mortgage