Legal Question in Real Estate Law in Georgia
I have a house in Georgia. Approximate appraisal and FHA loan balance are approximately the same ($100,000). I have been told by a mortgage broker at a national bank that FHA rules were changed after the mortgage meltdown in such a way as to make my house ineligible for a government backed loan or even conventional financing leaving me with the sole option of finding a cash sale.
According to HUD's website, the primary purpose of the FHA is to insure lenders against losses from a non-paying buyer. This insurance is paid for by premiums made by the buyer. Although FHA does not, as far as I can tell, issue an actual policy, these are the words HUD uses to describe their
raison d'etre.
So, if I pay insurance premiums to FHA for insurance to protect a lender from losses in the event I stop making mortgage payments (or even choose the deed in lieu of foreclosure path), how is it possible that the lender can still seek a deficiency judgement if they have been reimbursed by the FHA for losses they supposedly incur (Georgia being a recourse state aside)?
I have been unable to find any rule or regulation, aside from the $624,000 or so maximum, stating the amount or percentage of losses the FHA will pay.
1 Answer from Attorneys
Your question assumes the lender just automatically files a claim and gets a check, which is not necessarily true. Even if they get paid via insurance (not FHA reimbursement), you still owe what you agreed to pay, and and the obligation does not just vanish. The insurer might come after you.
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