MGIC Paid Off 2,400 Loans last month! Why Does the Borrower Still Need to Pay the Same Creditor?

Feb 14, 2014

Among the many insurance companies that paid off loans or assets based on loans, MGIC. Off 2400 loans a month of January alone, which appears to be virtually all residential mortgages. Press the reason that nobody is paying any attention to this is that normally the insurer acquires the claim through a legal process called subrogation. In the world of securitization the insurer waives subrogation. So we are left with a payment to a creditor. The creditor is identified as the lender for purposes of the insurance. There is no doubt in any venue that once a settlement is accepted by a creditor or claimant the case is over.

But in mortgage foreclosures in appears as though even the most basic and common sense knowledge is ignored. The creditor receives full payment and then allows an agent to foreclose on the property even though the account receivable not longer exists. The same failure of logic exists with respect to servicer advances where the creditor has been receiving payments regardless of whether the borrower has been making payments or not. For reasons beyond my comprehension courts have thus far mostly accepted the premise that it doesn’t make any difference how much money the creditor has received on this debt, as long as the borrower hasn’t paid the amount stated as due in the promissory note (even if the promissory note has been paid in full by third-party).

To top things off, GKW (my law firm — 850-765-1236) is handling a case where insurance paid off a loan upon the death of the owner. BOA filed the appropriate satisfaction of Mortgage. But then in the giant roulette we know as LPS they still had the loan active and a servicer convinced the decedent’s family to enter into a modification of the loan without telling them that the loan had been paid off. Eventually, after years of “modification” payments on a loan that did not exist, the servicer has filed a judicial foreclosure in Florida! And after being informed we have the recorded satisfaction they had yet another entity file a document that was signed by still another entity and they recorded it in the county records — stating that the BOA satisfaction was a mistake!

Do I still need need to convince anyone that they need a forensic report and expert declaration? Call 520-405-1688. And for the lawyers, my firm also provides litigation support and coaching for this litigation across the country.

Dan Edstrom sent me the following:

Neil,

You said in your seminar there are on your3 ways to discharge an obligation. Payment, Waiver of Payment or Magic. Spend to much for the holidays? Would you believe in magic …

http://www.nationalmortgagenews.com/dailybriefing/MGIC-Reduces-Delinquent-Loans-by-Over-1000-1041069-1.html?site=default_msn&utm_campaign=mortgage%20servicing%20news-feb%2012%202014&utm_medium=email&utm_source=newsletter

Quote

There were 9,365 new notices of delinquency in January, 385 more than the number received for December, but a significant improvement over the 11,098 new notices received in January 2013. Meanwhile, 7,745 loans returned to performing status during the month, while MGIC paid the claim on another 2,393 loans.The company denied or rescinded coverage on another 204 loans. This moved the inventory to 102,351 from 103,328 at the start of the month.

In December, 7,259 loans cured and it paid 2,445 claims.

Typically, delinquencies are up in January because of holiday-related spending with those bills coming due.

MGIC wrote $1.7 billion of primary new insurance during the month, compared with $2.2 billion in both December and January 2013.

It would be interesting to know who pays for the coverage and if the homeowner was notified and claim was filed (and paid/denied/rescinded/etc.). Also, why were the claims denied or coverage rescinded on the other loans? Was the loan bad, was a defective claim filed, or was a bad faith claim filed? What government entity (if any) has regulatory authority over MGIC, Radian and others? What can a homeowner do to find out if insurance coverage exists, whether a claim has been filed and what the status of the filed claim is?

Thanks,

Dan Edstrom
dmedstrom@dtc-systems.com
www.dtc-systems.net

Office: 916.207.6706
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