Quote:
Originally Posted by Rick Lee
Edit: Since you only need PMI on the amount financed above 80% LTV, that dollar amount might be the policy limit, which means it could run out a lot sooner.
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That's how you would
think it works or should work, but no; at least not on the PMI policy beneficiary/term docs I've seen. Those were for "flow" policies, so things might be different for the other types of PMI policies (although, I believe the flow policies are the most common, in which the borrower pays the premiums but the lender is the beneficiary).
The ones I've seen have specified coverage on the entire remaining balance that the borrower skipped out on (principal and interest), just at different percentages. Coverage also extended to any carrying costs the lender incurred during the entire foreclosure term (to include property upkeep/utilities, rehab/repair, taxes, legal fees, and all other expenses). It's a racket.