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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Personal Injury Law
Satisfied Customers: 111539
Experience:  Licensed Attorney. Over 20 years experience in personal injury and law enforcement.
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In addition to the previous question, research reveals reference

Customer Question

In addition to the previous question, research reveals reference to banks having "insurance" protection for defaulted loans. Where might that be authenticated? Who are the insurance companies providing that coverage?Query's to the banks legal dept, Fed Reserve and OCC go unanswered. Banks do have such insurance, which has been referred to in bank CPA testimony, if banks collect on said policies, who are they collecting for, them as servicers, or for their employers the securitized investors? if they do collect insurance, would not the insurance company become the subrogated pass through party of interest? In hundreds of inquiry's of banks as to the admission of receiving insurance compensation, not one has ever answered the question, choosing instead to ask for dismissal, rather than face the difficult question of actual "damages" as claimed, possibly subjecting them to sanctions for bringing forth a false claim and presentation of fraudulent claims in the complaint.
Submitted: 1 year ago.
Category: Personal Injury Law
Expert:  Irwin Law replied 1 year ago.
There is FHA, and conventional insurance that covers mortgage loans for the banks. VA has a loan guarantee program that is not considered insurance. I can go into more detail, but not in this format. It would take far too long. I will offer you some additional services and a direct contact. That will require a somewhat higher fee.
Customer: replied 1 year ago.

I am familiar with PMI regarding mortgage insurance, my interest is in insurance covering securitized unsecured bank loans and lines of credit where the bank is mere servicer.

Expert:  Irwin Law replied 1 year ago.
I an sorry that I can't help you with that. I will open the question up for others. Please do not send a Reply to this.
Expert:  Law Educator, Esq. replied 1 year ago.
Thank you for your question. I am a different contributor.

I look forward to working with you to provide you the information you are seeking for educational purposes only.

While banks do have insurance to protect them against losses from foreclosure, that does not mean that those insurers get subrogation rights. Any subrogation rights would be based on the contract between the insurer and the bank and their contracts can make the bank liable for any recovery of deficiency judgments and if the bank recovers they then have to reimburse the insurer. If the bank is not able to recover, which in 90% of the foreclosures is the case, then the insurance gets nothing back. This is, however, all based on the particular insurance the bank has to cover these defaults and what is stated in the contract and in some cases the bank can even later assign rights of collection to their insurer once the insurer pays (this happens on a rare basis, but it happens and I have seen cases where the bank's mortgage insurer sues the delinquent debtor).
Customer: replied 1 year ago.

Thank you for the answer, however I am familiar with PMI regarding mortgage insurance, and am up to speed regarding re: mortgages. My immediate interest is in how to find out what the insurance is banks have covering securitized unsecured bank loans and lines of credit where the bank is a mere servicer for credit card accounts, and if possible the names of those insurance providers. Read a few cases where the bank refused to answer the question, and chose instead to ask for a dismissal, when asked to prove damages. All such requests from OCC and the FDIC go unanswered with no replies at all. Was even hoping for a denial that such insurance existed for banks, but nada, zip reply's.

Expert:  Law Educator, Esq. replied 1 year ago.
Thank you for your reply.

I am afraid that what you are seeking is something that seems to have been part of the rumor mill for awhile. Here is an article explaining this and explaining why it is not true either: http://mandelman.ml-implode.com/2013/07/did-some-type-of-insurance-or-credit-default-swap-pay-off-your-mortgage/

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