This information by Portland area Real Estate Expert, Todd Clark is valuable to any seller looking at a negotiating a sale on their house and another possible pitfall. Thanks, Todd, for sharing.
Via
Todd Clark (Broker/Sales Coach), GRI (Beaverton, Oregon Real Estate Expert) (Palazzo Realty Group):
So
many people over the past
couple years saved money getting a 100% loan rather than an 80/20 or
80/15/5
loan. But, those who got that 100% loan were stuck having
to pay PMI on
their
loan, which in reality, if they paid it down below 80% loan to value
ratio, the
PMI would be taken off.
But,
as many found out when
the bubble started to burst, the 80% mark was going to be a lot harder
to hit
than they thought. With declining house values, that 80%
value just
wasn’t
there anymore and they were stuck paying this PMI for a lot longer time
than
they had planned.
So,
now they are stuck paying
this insurance bill every month from anywhere between $100 and $200 a
month,
basically to protect the bank if the buyer should default. Just like in
a car
accident with a new car, the insurance is there more to protect the
person who
gave the loan rather than the person actually driving the car.
But,
yesterday, I was being
told by the negotiator of a short sale I’m doing, that they are willing
to
accept the terms the buyer has presented to the bank as long as the
seller is
willing to sign a promissory note for $25,000 with no
interest at $101
dollars
per month. I then asked for what? They said that is what the private
mortgage
company is requesting to pay them back for their loss on this
transaction?
WHAT? Why has my client
been paying the $176 per month for the past two
and a
half years for if the insurance company wasn’t going to actually pay if
the
home owner defaulted?
Isn’t that what that insurance
was actually put
in place
for in the first place?
So,
we have sent it back to
the bank telling them to take a hike as that is what that insurance is
for and
why he has been paying. If they don’t want to accept that,
then they
can have
the home back according to the owner. I’m hoping it doesn’t come down
to that,
because this seller really has done everything the bank has asked to
get this home
sold and I know these buyers have been waiting way longer than I
expected anyone
to have to wait to move in to their new home.
It
really would be heart
breaking to have to tell them the bank is not willing to do this deal
because
my client won’t pay the insurance company back something that he
already has
been… a premium every month for just in case something like this
happened.
What
are your thoughts on
this? Any suggestions?
Todd Clark - Broker / Sales Coach
Palazzo Realty Group
Phone: (503)524-9494
Fax: (503)622-8739
©2009
Todd Clark - Private
Mortgage Insurance, tell me again why I paid it?
;)
;)
