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Originally Posted by rory breaker  I am in the final stages of purchasing a home via short sale (this forum has been a ton of help by the way) and it looks like its going to come down to something that happened when the home was previously "sold" via this process.....the bank that holds the PMI portion of the loan is asking for the seller to contribute some ridiculous amount, like $20k, to satisfy the lien. He absolutely will not sign a promissory note and would prefer bankruptcy. Financially, there is no way he can pay it, so I dont blame him not wanting to sign it.
My questions:
1) How bad is it for this guy if he goes into bankruptcy, versus foreclosing on the house?
2) It seems ridiculous that the bank is asking him for $20k when thats almost the entire amount of difference between the loan due and what Im offering. Is there a way around this? Is this a negotiable number? BOA/Countrywide, who is holding the 1st portion of the loan, says that if the PMI company says thats what they want, there is nothing they or we can do, it's either yes does the seller want to accept or no, he wont and they foreclose. Is this accurate?
3) If they do come back and ask for $20k or $15k or $10k or whatever - what should we do? How do we go about eliminating this number? Remember, this is NOT BOA/ CW asking for this, its the other bank/PMI company. Has anyone had luck reaching out to the other lienholder to negotiate or ask their exec team to remove the promissory note requirement in good faith?
Your help/direction is much appreciated!!!! |
So lets see if I can try and help with your questions. When you say "the bank that holds the PMI portion of the loan", what exactly do you mean by that? Is there one or two loans on this property?
PMI is an insurance that a lender takes out on the loan. PMI would not insure just a portion of the loan, so maybe you're talking about two different loans, one of which has a PMI.
1) How bad is it for this guy if he goes into bankruptcy, versus foreclosing on the house?
Bankruptcy is the worst hit on the credit, worse then foreclosure or short sale.
2) It seems ridiculous that the bank is asking him for $20k when thats almost the entire amount of difference between the loan due and what Im offering. Is there a way around this? Is this a negotiable number? BOA/Countrywide, who is holding the 1st portion of the loan, says that if the PMI company says thats what they want, there is nothing they or we can do, it's either yes does the seller want to accept or no, he wont and they foreclose. Is this accurate?
Are you saying they are not willing to settle for less then full amount... was not clear from your statement. Everything is negotiable if two sides are willing to negotiate, if they are not willing... I not sure what you can do, other then offer more money.
Again, not clear as to what you mean by 1st portion of the loan, are you talking about 1st loan?
If lenders are not willing to negotiate you cannot force them. Short sales are voluntary, and it sounds like these lenders or lender has PMI and doesn't care because they will get their money after foreclosure.
3) If they do come back and ask for $20k or $15k or $10k or whatever - what should we do? How do we go about eliminating this number? Remember, this is NOT BOA/
CW asking for this, its the other bank/PMI company. Has anyone had luck reaching out to the other lienholder to negotiate or ask their exec team to remove the promissory note requirement in good faith?
You can counter or you can walk away. You cannot "eliminate", you can just tell them, this is what we are willing to pay and if they do not agree, find something else.