Zillow Advice: Mortgage - Paid PMI on mortgage. Mortgage is now in default, 18 months. How does PMI come into play with this? http://www.zillow.com/advice-thread/Paid-PMI-on-mortgage-Mortgage-is-now-in-default-18-months-How-does-PMI-come-into-play-with-this/471036/ Zillow Advice | Zillow Real Estate PMI protects the lender's ... http://www.zillow.com/advice-thread/Paid-PMI-on-mortgage-Mortgage-is-now-in-default-18-months-How-does-PMI-come-into-play-with-this/471036/ PMI protects the lender's exposure but only at a predetermined percentage of the original loan amount insured.&nbsp; If you have a conventional loan I would guess your coverage is somewhere 12-30%.&nbsp; If the LTV really is that high, this coverage which in your scenario does not appear to help you at all, really is insignificant.&nbsp; However from personal dealings with customers in multiple states since 2003, a possible deficiency judgement for the balance shortfall if/after the PMI company pays up is significant.&nbsp; <br/><br/>The best thing to do would be to seek out a specialist in your local area because laws regarding this type of judgement vary based on state laws at the time the foreclosure occurs.&nbsp; For example, in Florida for the past few years up until the end of 2012 lenders could not seek a judgement if the foreclosure was on a primary residence.&nbsp; If the property was investment property, you were out of luck.&nbsp; And from what I am reading about new changes in the law, this may not be true in 2013.<br/><br/>Also given that the lender appears to be dragging this process out is all the more reason to seek assistance sooner rather than later.&nbsp; <br/>&nbsp; Wed, 12 Dec 2012 05:56:00 GMT http://www.zillow.com/advice-thread/Paid-PMI-on-mortgage-Mortgage-is-now-in-default-18-months-How-does-PMI-come-into-play-with-this/471036/ 2012-12-12T05:56:00Z "Private Mortgage Insurance ... http://www.zillow.com/advice-thread/Paid-PMI-on-mortgage-Mortgage-is-now-in-default-18-months-How-does-PMI-come-into-play-with-this/471036/ "Private Mortgage Insurance (PMI) is insurance that protects your lender against non-payment should you default on your loan. It's important to understand that the primary and only real purpose for mortgage <br/>insurance is to protect your lender&acirc;&euro;&rdquo;not you. As the buyer of this coverage, you're paying the premiums, so that your lender is protected."<br/><br/>Lets say you purchase a $100,000 home with only $5,000 down. PMI would cover the lender for $15,000 the amount which would bring the down payment to 20%. This way the maximum loss to the lender would be 80% of the loan. Before the downturn in the market, lender always felt a property would be worth at least the 80% mortgage to the buyer.<br/><br/>So now, even if the home is only worth $40,000 the most the lender will receive from the PMI is $15,000. Wed, 12 Dec 2012 01:05:00 GMT http://www.zillow.com/advice-thread/Paid-PMI-on-mortgage-Mortgage-is-now-in-default-18-months-How-does-PMI-come-into-play-with-this/471036/ 2012-12-12T01:05:00Z