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KJL LAW, Arbitrator
Category: Real Estate Law
Satisfied Customers: 613
Experience:  Attorney at Law Office of KJLLAW
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I live in CT and my mortgage holder is a bank in new York. I

Customer Question

I live in CT and my mortgage holder is a bank in new York. I pay PMI which is included with my mortgage, which happens to be an FHA mortgage on a condo. If the bank forecloses on my condo, does the PMI prevent the bank from being granted a deficiency judgement against me since the condo is worth at least $40,000 less than I owe on the mortgage? I'd also like to know if filing bankruptcy would also protect me from the bank filing and winning a deficiency case against me.
Submitted: 6 months ago.
Category: Real Estate Law
Expert:  KJL LAW replied 6 months ago.
Hello and welcome to Just Answer. No attorney-client relationship or privilege is formed by speaking to an expert on this site, the answers are for general information. By continuing, you confirm that you understand and agree to these terms.To answer your first question, even if your property is in Connecticut, Private Mortgage Insurance, (PMI), which is basically, insurance, protects the bank in case you default. If you default and the lender forecloses then if there is a balance remaining, after the home has been sold the PMI insurance will kick in and cover the balance and other expenses the lender may have incurred during the process of recovery, if the PMI does no cover the amount after sale, only then will you be responsible for the portion that was not covered by the sale and PMI insurance, and they will obtain a deficiency judgment on the amount not covered.Your second question, if you file bankruptcy then you will include the mortgage debt in the bankruptcy and you will not owe the bank if there is a deficiency, it will be wiped out, and the bank will not be able to obtain a deficiency judgment against you. I hope this helps with your question.
Customer: replied 6 months ago.
You did NOT answer my question about PMI. It seems to me that you contradicted yourself. First you stated that PMI WILL cover the full amount of the mortgage balance, but then you said that "IF the PMI does not cover it" then I will be responsible for the deficiency. So you did NOT answer my question about PMI at all
Customer: replied 6 months ago.
By the way, my question was updated while you were attempting to answer it, so please allow me to point out to you that the mortgage in question is an FHA mortgage which happens to include PMI, and it happens to be on a condo which is located in CT. I don't know if any of that matters, so I thought it would be best for me to point these things out to you
Expert:  KJL LAW replied 6 months ago.
To clarify, ​Connecticut does not have a law restricting deficiency judgments. PMI is an insurance policy to protect the bank and not you as the borrower regardless of the loan type HFA, Conventional or the property type, condo, coop, land, etc. In order to see what your PMI covers you would have to obtain a copy of the contract for the PMI. In many cases, the sale amount and the PMI coverage are not enough to cover the deficiency.