?'s about PMI

[MH_Sucker]

We are trying to get a short sale approved and we just found out today that we have PMI. I have a couple of questions about this.

One - how can we have PMI and we never knew about it? I poured over our docs and see NOTHING in there about PMI.

Two - How does PMI affect the foreclosure process (if at all)?

Three - How does PMI affect the short sale process (if at all)?

Any insight or information is appreciated!

[The Professor]

This was "lender purchased" PMI. This could have happened for two reasons. One is that is was "planned" and the other one is that it was "unplanned at origination but required sometime later. Effectively what may have happened in connection with an attempted sale of your loan on the secondary market, it became "unsellable" absent private mortgage insurance and in order to sell is to an investor PMI was purchased for the loan. Premiums for the PMI are paid by reducing the effective yield of the loan (meaning a portion of the interest earned is applied towards the PMI insurance.

So the existence of the PMI is something that could have not been transparent to you.

As to your two other questions, both have a "yes" answer. The PMI company becomes a key player, with the insured investor not making any decision without the PMI company involved in the decision making process. The reason is the investor does not to provide the PMI company with the ability to not meet its insurance obligation.

Daniel

[Enough Already]

MH,
How did you find out you have PMI?

[MH_Sucker]

We found out from the negotiator that we are working with for our short sale. They were giving our realtor the timeline for approval and they told her that we will have to get 3 approvals to make it come together. One for the first loan, one for the second and one from the insurance company for the PMI.

[faith]

Originally Posted by MH_Sucker

We found out from the negotiator that we are working with for our short sale. They were giving our realtor the timeline for approval and they told her that we will have to get 3 approvals to make it come together. One for the first loan, one for the second and one from the insurance company for the PMI.

The Negotiator of the lender or the servicer will tell your agent that there's a PMI and they require a promissory note for the seller which is you to sign to pay the balance of the 2nd mortgage. But be persistent and bold but firm to say no, you are not going to sign the promissory note. Or you can either do two of the following, settle the 2nd mortgage for 10% of what you owe, if you owe the 2nd mortgage $100,000 that will be $10,000 payable in 30 years no interest. Or tell them you are not going to sign the promissory note to pay for the 2nd mortgage.

I have threatened to file a bankruptcy and did not sign the promissory note. I ask for a letter stating they will not pursue any deficiency judgment against us and the balance owed was cancelled. It also depends on your investor, if they agree to settle with the 2nd mortgage and the negotiator will work with you and the investor and the insurer to get a resolution. Mine settle with the investor for $14k. But be prepare once you have the Short Sale approved, the 2nd mortgage will inquire of your credit, make address change for you so that your credit score will go down.

I am disputing what they put in the credit agency that I still have a balance with my 2nd mortgage. But at least I got rid of my headache which is my house. And I have a letter from Countrywide and their negotiator stating they will not pursue a deficiency judgment against me and how much the balance was cancelled. I also received a reconveyance letter from the Title Company and the Recorder's 0ffice stating that both loans were paid in full.

Good luck, hope your Short Sale will be approved for both loans.

God bless.

[MH_Sucker]

Thanks for the information. So now we are in the final stages of negotiations. We have been offered the following: $12,000 promissory note payable over 10 years, zero interest, $2,000 cash at closing. Any thougts from anyone? Is this fair? I don't know how we would come up with the cash. We used all the money we saved to pay off all of our credit cards. I have asked my realtor to tell them that we will sign the note but not bring cash to the closing.

The deal breaker is the insurance company. Don't they have more to lose if we let it go into foreclosure? Right now we have a cash buyer and my realtor told me that prices continue to drop in our area and the inventory continues to increase.

[helpinNE]

MH_Sucker

Are you in a recourse state? Are your loans recourse? Can the lender come after you after a foreclosure is complete?

If you are NOT in a recourse state and if your loans are NOT recourse than you do not have much to worry about if you do not sign the promissory note and the house goes into forclosure.
However, if your loans are recourse, you do have cause to become concerned, especially with the PMI because the insurance company will come after you to try and recover any monies they had to pay to the mortgage company (Read Racoon's story on here).
If you do have recourse loans, it may be in your best interest to sign the note but make sure you understand what you are signing, even if you have to have an attorney read it over. As for the $2,000 at closing, if you do not have it tell them that. If the realtor's want to close the deal bad enough, and the $2,000 is a deal breaker, they will reduce their comission to cover this. At this point, if the house does not close, your realtor and the selling realtor have the most to lose because they will get nothing if it falls apart.
I had a family member who did a short sale and at the last minute one of the mortgage companies changed the figure they needed and it was going to require them to bring cash to the table they did not have. In the end it was the realtors who each took $500 less commission at closing. For them it was either take $500 less or get nothing at all.
Best of luck.

[faith]

Originally Posted by MH_Sucker

Thanks for the information. So now we are in the final stages of negotiations. We have been offered the following: $12,000 promissory note payable over 10 years, zero interest, $2,000 cash at closing. Any thougts from anyone? Is this fair? I don't know how we would come up with the cash. We used all the money we saved to pay off all of our credit cards. I have asked my realtor to tell them that we will sign the note but not bring cash to the closing.

The deal breaker is the insurance company. Don't they have more to lose if we let it go into foreclosure? Right now we have a cash buyer and my realtor told me that prices continue to drop in our area and the inventory continues to increase.

Hello,
You can always try to negotiate with the Negotiator. The $12,000 can they lower it to $8,000, the $2,000 can you ask your realtor to get it from the buyer. If the selling agent really wants to sell this house, they will ask the buyer if they can add $2,000 more from their offer. That's what my agent and the agent of my buyer did. My Agent asked the buyer's agent if they can offer $8000 more to cover for their closing costs and other fees instead of me paying for it. My agent negotiate with the Negotiator that I will not pay anything at the closing, no closing costs. CW pays my agent 5% commission and split it with the buyer's agent. My agent did everything. He negotiated with the Negotiator and the buyer's agent. I was firmed in telling them that I will not pay anything and will not sign a promissory note, it took time but it's worth the wait. The only drawback was the buyers backed out but my agent kept showing my house to other agents and we kept accepting offers, just in case the buyer backout.
If you're firmed in your decision you have to let them know. Like you will not sign a promissory note and let them foreclose the house. Don't be afraid to tell them how you feel. It's their loss if they turn down your offer Just be patient and persistence. Hope this helps.

Thanks,