To pick up on Pendle's points:(posted 8536 days ago)Once Rights of Sub have been exercised, the Lender is not out of the equation because the debt is assigned. Businesses factor debts for cashflow purposes;the Lender does not get 100% of the shortfall from the Insurance Co, it gets a proportion, much as a Factor will only pay say 80p on the pound for an invoice. Any debt, however, cannot be written off if it is subject to a Rights of Sub clause, or a similar legal clause, i.e. someone else has an interest in it or the goods or services remain the property of the lender/seller until FULLY paid for and title is retained until the goods or services are paid for. A typical finance agreement on a new car will state that the title of the car doesn't pass to you until you have coughed up the last penny on the last payment. So....where the Lender chases Mrs X for years, even though they have been paid out by the Insurance Co, it is because neither party can have a write-off until the term of the Rights of Sub has expired. Then and only then will the Lender back off, as it becomes the Insurance Co's problem and the Lender can legitimately include the difference between their pay out and the shortfall as a bad debt in that years accounts. It is in their interests to inflate the shortfall to get a bigger deduction down the accounting line. It would also explain the reckless disregard for the obscenely low prices repo properties are sold for (they don't have to care do they?)
I quite agree that the Mortgage Contract should detail the MIG and a copy of the legal clause and the Borrower should sign that s/he is agreeing to it. None of us knew what it was and that we could be chased forever even if this so-called policy we paid for but weren't allegedly party to paid out!
As you can always assign a debt to a third party, the debtor has no initial rights in that regard. What is moot, is whether the MIG creates a triangulation contract between the borrower and the Lender and the Insurance Co. By implication the Borrower would then, as Pendle says, have to be party to that MIG. Since the Lender's mantra is that we are not, the MIG can only be a contract between the Lender and the Insurance Co until the debt is satisfied. Once the payout has occurred, the Lender or the Insurance Co has the balance of six years from to chase. I firmly believe that the shortfall "debt" after a pay out can only fall to be treated as one due under a simple contract [assigned], and the six year rule MUST apply.
I am not too clear about the money order situation and the bearing it has, but I think you are onto something. However, the repossession of a property does not terminate the mortgage contract; it just means all amounts forwarded under its Terms and Conditions immediately become due and payable. I think the contract is legally terminated the second the Rights of Sub are exercised and a payout occurs and that is fly in the Lenders ointment because the older ones never intended for that to happen. Just my opinion but it follows your logic Pendle at least in part!