PMI (Private Mortgage Insurance) Coming Back

We have begun to see PMI companies coming back into the market and making conventional loans with less than 20% down possible again. Even though MGIC, PMI and others are still struggling with losses, they are now pursuing making 5% and 10% down loans for home buyers more available than any time in the last two years. PMI just removed the greater Los Angeles and San Francisco areas from their Distressed Markets list. That must mean they see that the markets have bottomed and are headed up in price. Whether they are completely correct remains to be seen, but we are seeing increases in most areas in California. With PMI available, that means more buyers can buy which should further help the market.

PMI is a good thing for the market in most instances. Here is a potential GOTCHA for owners  doing short sales or being foreclosed. It is being reported that the PMI companies are now beginning to come after borrowers for deficiency judgments EVEN IF THE MORTGAGE HOLDER AGREED NOT TO! So note to sellers and agents–if PMI is on the loan make sure to get a deal in writing with the PMI insurance company not to sue for deficiency before making a short sale or strategic default deed in lieu on your property. This could get nasty if not handled in the beginning of a negotiation.