How Mortgage Insurance Can Help You Avoid ForeclosureIf your lender forced you to buy mortgage insurance to qualify for your home loan, you probably thought it was just another wasted closing cost. WRONG! This one's your new best friend so get to know them ASAP. Mortgage insurance was originally designed to protect banks if you default on your loan by reimbursing lenders for their foreclosure related losses and expenses. However, what's happened is that mortgage insurers have literally become "borrower's advocates" in many situations because they'd rather help you avoid foreclosure than paying banks an average of $50-60,000 per claim. Although these large financial giants generally make decisions solely based on short term profits, this is one of the rare times when those interests happen to coincide with your interests so take advantage of your new friend. You can find their contact information on your loan closing documents if they haven't already contacted you or speak with the broker or lender you worked with to find the information. What Your Mortgage Insurer Can Do For YouMortgage insurers are motivated to work with you because no matter what the remedy to avoid foreclosure, its always cheaper than the total costs of foreclosure lawsuits, foreclosure sales, lawyers fees, etc... all of which must be paid by the insurer to the bank for each and every bad loan.There are several ways the insurer can help you avoid foreclosure such as contributing part of the money for loan modifications, paying past due balances, unpaid interest or late fees to help you get current and give you a second chance to stay up to date on payments, or simply giving you money to help with transition and relocation if you decide on a short sale. Regardless of which foreclosure solution you pursue, its important to provide enough detailed financial information to convince the insurer you need help. If the company suspects you're looking for a free ride, they may take their chances and hope you avoid foreclosure on your own rather than helping you. And remember, whatever the mortgage insurer may say or do, the owner of your loan must provide final approval so make sure they sign off on anything the insurer offers to help.
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