But the buyer still gets clear title?
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Mortgagee auctions put valuations in spotlight
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Hi Glenis, its called LMI, LEP, and taken out by the lender and paid for by the borrower. It's charged on any loan with an LVR of above 80%. It is sometimes waived or reduced depending on the strength of the application. It's not an insurance that you can go out and buy.
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Glenis,
The LMI policy pays out to the bank, not the vendor.
There is no policy that I am aware of that a homeowner can buy to insure themselves against the risk of their property selling for less than is secured against it.
Paul.
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Originally posted by Beagle View PostYes, the sale is clean. The issue is between the lender and the previous owner.
You need to protect yourself against this so that not all of the dominos fall over at the same time.
Pretty hard protecting yourself against this legally when all the banks are wanting personal guarantees - or maybe you meant by buying & borrowing sensibly, diversifying maybe?
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Originally posted by muppet View PostAfter much encouragement from the auctioneer it sold to a dapper gentleman in a pinstriped suit for ...
Article was misleading as they quoted the security amount, not the amount of the drawdown (though at one point they do note that the drawdown might be less). I remember being shocked when I saw the security amount on my loan and asked why it had to be so much higher than the actual amount withdrawn (it equated to many years interest).
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I have been known to wear pinstrips on occasion and I like to think of myself as dapper... but it wasn't me.
Cheers
DavidNew to property investing? See: Best PropertyTalk Threads for New and Old Investors And/Or:Propertytalk Wiki
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Equity Warranty
Originally posted by SuperDad View PostGlenis,
The LMI policy pays out to the bank, not the vendor.
There is no policy that I am aware of that a homeowner can buy to insure themselves against the risk of their property selling for less than is secured against it.
Paul.
PMI, LMI, etc., protects the lender for the delta between the size of the mortgage and any short fall realized by a mortgagee/foreclosure sale. It is taken out by the lender, paid for by the borrower and called Private Mortgage Insurance. There is a company of the same name that owes its birth to Sears Roebuck and also operates in AUS and NZ.
Equity Warranties take their origin from PMI and an seller's warranty on the infrastructure. Personal
Real Estate Investor Magazine asked why we could not warrant the equity. We have since put together a program with a couple of surety companies and a construction insurance company and have built this around the the actuarial tables, avergage duration of homeownership and a seller paid funding model.
The first homebuilder has found that funding the program (on a major development of 1100 homes at $3000 per warranty per sale) funds the first $30 million of surety in less than 48 months. The reduction in discounts has already proved its worth. We expect 30,000 owner occupier warranties to be in place by year end.
Investors can buy into a one time plan for a fixed arbitrage number based on trading volume.
This changes the notion of real estate equity risk and pricing and is getting real interest from significant players. We already have interest in the business from two large US real estate settlement and insurance companies that would like to buy the idea.
Our mission is to change the perception of real estate as a personal investment and make a shekel or two. There is more to come.
Best - Andrew (Weaseling away) Waite
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