Legal Question in Real Estate Law in Virginia
I may have to go into foreclosure. I have mortgage insurance on the loan and I know it's to protect me. If I go into foreclosure, will the mortgage insurance payoff the loan, and if so, who get's the property.
2 Answers from Attorneys
No, the mortgage insurance will not "payoff the loan" under the circumstances described and the property would likely be sold at auction to the highest bidder. (The insurance that you've described may offer some protection to you against liability for any deficiency that might result from the auction sale proceeds being too low to cover the existing loan on the property.)
Unless you have some odd program that I've never heard of, the "PMI" or private mortgage insurance that you pay for is to benefit the lender, not you. It pays off the loan, but then the PMI insurer owns the lender's claim against you.
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