PMI Insurance, how does it work?

Question

Mom and brother purchased a house together "in survivorship." That's what's written in the Deed. Mom passed away the other day and I need to better understand how PMI works at this point. Will it cover any of the principle loan amount or is my brother fully responsible to continue making the mortgage payments on his own? I'm the oldest child (next of kin) and trying to take care of things from Pa. They live in Ct. Any guidance is appreciated. Thank You in advance.

Answer 1

PMI stands for "private mortgage insurance" is for the protection of the lender in the event you default on the mortgage, it is not for the homeowner.

If your mother and brother were on the mortgage together, and she passed away, then yes, your brother is fully responsible for the payments.

Your brother will not have to pay estate taxes on the home, because your brother is on the title and did not legally inherit the house. That is the benefit of having another family member on the title prior to a death.

However, if both of them and let's say, your mother was on the Deed, then her estate would be responsible for the mortgage, in the event your brother wasn't on it.

The bank doesn't care who they get their payments from, as long as they do. If someone doesn't pay it, they will foreclose on the home, which is against the estate.

You just have to decide whether or not you want to keep the house or not. I would also speak with a local Real Estate attorney for further assistance to make sure your rights are protected.

Answer 2

First, my sympathies to you and your family at this time. Losing a parent for the children no matter what age is always tough. Hang in there, the warm loving memories will soon replace the profound sense of loss you are feeling right now.

How the property is titled - rights of survivorship, means that the surviving individual(s) retain 100% ownership of the property. That said, your brother now owns 100% of the property. PMI (Private Mortgage Insurance) is required when a borrower(s) loan amount is higher than 80% of the value of the home. It is designed to protect the LENDER against default (non-payment) of the loan.
Your brother may be on the loan, may not be. Regardless, if anyone in the family wants to keep the home, the mortgage MUST be paid. If your brother is on the loan, he will be held 100% responsible now, and if he falls behind, it will report on his credit file.
Your mother may have had a mortgage protection policy. It is like life insurance. The amount it will pay is the slow declining balance of the mortgage. Inquire with the lender she had, and look though her bills, check book, and important papers. These types of policies are inexpensive for a life insurance product because the face amount declines as the mortgage balance is paid down over time. If she had one of these policies, you will need to file a claim. In the meantime, advise your brother to make the mortgage paymnet to protect his credit.
I am not sure of hte estate laws in CT, but the property may or may not need to be probated. Ask an estate attorney.
I can tell you that PMI (that shows up on the mortgage bill) is not life insurance like you think. But, look through her papers, she may have had mortgage protection insurance.

Hope this helps you,

Answer 3

My sympathy is with you on the loss of your Mother.

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PMI is Private Mortgage Insurance. It is only activated if and when the mortgage is overdue, usually 90 days or more, and it only makes payment to the lender(s). If PMI is activated, you can expect a foreclosure suit by the lender -- any deficiency after the foreclosure will be paid by the PMI company directly to the lender. If this happens, the PMI company has whatever legal rights the lender previously had under the loan, including the possible ability to sue the owners for the deficiency. Owners would include your Mother's estate.

From the few facts provided, your brother is now liable for the mortgage on his own -- which is only fair since he will be sole owner of the house. IF {big IF} he can make the payments and keep the mortgage current.

If you mother's estate is large enough that estate taxes apply, [either Federal or Conn.], it is likely that they attach pro-rata to all assets of the deceased, including the 1/2 interest in the house.

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It seems likely that Conn. law requires that the Executor [or Personal Representative as some states style it] for your Mother's estate be a resident of Conn.

If so, you can not serve in this capacity. In any event, your Mother's Will (or Conn. law if she didn't have one) determines who will be the executor, within the limits prescribed by Conn. law.

The Executor is the person who has to figure out the estate tax angles etc.


you might want to google Conn. law on this.

Answer 4

My condolences, best thing I know on how to help you understand is send you to where the government explains how PMI works and what it does and does not do.

HUD Private Mortgage Insurance (PMI) Information: http://www.hud.gov/offices/hsg/sfh/res/respapmi.cfm

Best of luck to you on your research