Can someone please explain to me why a Mortgage Insurance company can kill a deal where MI was not needed when the original loan was taken out? Here are the specifics: My client who is also a Realtor and friend, originally took out an 80/10/10 SPECIFICALLY to avoid PMI. She leveraged her equity and obtained a second loan (a piggyback loan) to avoid PMI. They put 10% down, and have since paid off the other 10%. There is one loan remaining with BofA. All negotiations are through the Equator system. My client paid $187k, owes $149k, and the BPO came in at $90k. The buyer even increased their offer to meet the BPO value at $90k. The market rent for this property is about $800 per month, and her pay option arm interest only payment is $1200 per month. The Trustee Sale is currently scheduled for March 30.
Technically, an MI company should not be involved, as this type of financing did not require it at time of purchase. I have heard that many lenders started taking out MI policies when the market started tanking....but I don't know much about it. The MI company, however, at the eleventh hour, now wants $15k. She simply doesn't have it, and her bank statements clearly show she doesn't have it.
She is willing to do a promissory note at 0% interest, but that is not even an option here. I suggested that we counter with some kind of payoff.....something is better than nothing in this case, and she said that she CAN come up with $2500. We are waiting to hear back, but at 16% of what they are looking for, I am not hopeful.
Even if she did have the $15k, I don't know that it would be to her advantage to pay that kind of money out of pocket. The property is an investment property, though it was her primary residence when originally purchased. Arizona is an anti-deficiency state. She doesn't care that she won't be able to buy another home again for 3-5 years with a foreclosure on her credit. With the new FHA guidelines requiring 3 years before one can buy again after a short sale OR foreclosure, it seems that the advantages to short selling vs. foreclosing on an investment property here in AZ are not significant.....and certainly not worth $15k.
What have your experiences been with Mortgage Insurance companies? How would you advise your client in this situation?
Do NOT be foreclosed on! Avoid foreclosure. The Bank Pays us to Short Sell your Home.
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Jessica Sulliman & Randy Curnutt
602-677-7977
www.ShortSaleMyPhoenixHome.com
About the Author...
This article was provided by Jessica Sulliman, a Nationally recognized Realtor and Certified Short Sale & REO Specialist. Jessica can be reached via e-mail at jessica.sulliman@ashbyrealty.com by cell phone or text message at 602-677-7977. Jessica has helped thousands of people buy and sell their home. For Arizona real estate and homes see www.sunshinespecialists.com or www.jessicasshortsales.com. For more info regarding short selling your home, please visit www.shortsalemyphoenixhome.com.
Specializing in the following Metro Phoenix areas in Arizona: Queen Creek, Gilbert, Chandler, Mesa, Scottsdale, Apache Junction, Gold Canyon, Tempe, Florence, San Tan Valley, Coolidge, Casa Grande, Eloy, Maricopa, Ahwatukee.
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