I started to put this in the financing forum but it is more of a rant than a question. The question is why is it that the financial collapse is not an insurance collapse instead of a mortgage collapse? They make me pay for PMI and if I don’t pay my mortgage PMI pays. But who do they pay? If they pay me then I get my house paid off. If they pay the mortgage company the mortgage company gets their money and my house which they sell again so they can’t collapse. My question is who got paid all these PMI funds from all these foreclosures? Did they just take my money?
Thats a great question. Wish I knew the answer too.
If I am correct last year Warren Buffet invested heavily into the insurance companies providing PMI or backing it. Like anything else, it is insurance and insurance companies operate on the highest profit of any business in corp america.
But we need to remember most loans were/are done without PMI still. During the boom, we saw banks advertising 100% NO PMI, 90% NO PMI. anything to draw in business. PMI was done when you did 1 loan for over 80%. So if you did an 80/20, no PMI needed. I even did a refi at 90% LTV and had no PMI on it for one property.
Someone in REI posted “PMI US Market Risk” as an interesting site to google. PMI Companies do regular risk assessment and post it. An interesting site to monitor for their predictions.
But I’m as curious as yrush2000-- someone enlighten us-- WHAT HAPPENED TO ALL MY PMI money that I had to pay?
Furnishedowner
As far as I know, the insurance companies are still paying their 20% of the mortgage amount, but let’s face it: foreclosed houses are selling for a lot less than 80% of the 100% mortgage amount taken out at the height of the bubble.
When you make an offer on a foreclosure, one of the steps is for the mortgage insurance company to approve the sale.
My opinion is that PMI is a huge waste of money every month. I always put enough down so I don’t have to pay PMI.
You can buy a place $10k or $15k more expensive and have the same payment if you aren’t paying PMI. 10k is a lot of difference in quality, even in an expensive area. I’d rather have that money in my equity and not in the insurance company’s pocket.
tatertot,
That is a lesson that I have learned the hard way…by continuing to pay $47 a month, probably forever, for PMI on a little rental house. It’s impossible to get PMI off.
Now the PMI company wants a $600 appraisal to confirm that the mortgage is below 70% LTV. The original mortgage. This is a money-generating scam in my opinion.
Furnishedowner
I guess PMI is like childsupport. It is supposed to go to buy your kid Pampers but instead it goes to get you ex-wife’s (girlfriend) hair fixed so she looks good for her current boyfriend.
Bluemoon06,
Well, Duh! It’s what’s important.
Your jokes are great today! I really needed to laugh, thanks.
Furnishedowner