I'm posting this here because I saw a previous post from a somewhat similar situation in this sub where people actually knew their sh**. Meanwhile in the more relevant groups I just hear "get an attrorney." Not very helpful.
So we bought a new house in November. Didn't "move in" until December. We had money set aside to pay the mortgage on the old house as we cleaned it up and sold it. Expected it to be on the market for a few months, but not too long. But we DID take our sweet time in moving and a very large portion of items were still in the old house when...
On January 20th, the old house caught fire and burned down. No people were hurt. We were on track to clean up the house and sell it for about $475k. Part of the property covered a portion of the lake out back, so we KNEW it would sell fast, being a waterfront property.
Well, insurance (State Farm) found out we had a second house (we didn't say we didn, but we didn't say we didn't, either) and they are seriously trying to deny the claim now. It's almost June and we're still waiting on a THIRD appointment to do the Examination Under Oath. Their attorney has already cancelled twice.
Meanwhile, we're running out of money to pay two mortgages at the same time. We've honestly considered just walking away from the other mortgage. Only my husband's credit would be affected for that house, not mine, and we already have a new house anyway in both of our names. My credit could go towards anything else we may need good credit for, like a vehicle purchase or something. We worried about the mortgage company coming after us for the debt though.
But then I read that the mortgage company can file their own claim - even if ours is denied. (I did check my policy, and that is indeed the case with my policy.) That means they'll get their money either way, and we'll *at least* be free of that debt - my husband will just have really bad credit for 7 years.
My question is, if we get denied and the mortgage company files their own claim, does the mortgage company generally file a claim for the ENTIRE value of the house? Or do they only file a claim for their portion? If they file for the entire value of the house, I assume we still get the funds for everything above our mortgage balance (plus late fees and whatever other expenses we incurred if we walked away, of course)? We only owed about $150k on the house, and downgraded when we moved, so we were really looking at a SIGNIFICANT amount of the new mortgage being paid down. We can afford the new mortgage (BY ITSELF), but would really love that extra to pay it down anyway.
(And yes, we have talked about forbearance of the loan as well, but would really just love to offload the house and flip off the insurance company.)
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source https://www.reddit.com/r/RealEstate/comments/1todp3h/questions_about_mortgage_insurance_and_a_fire/
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