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Mortgage Insurance Companies & Short Sale Approvals ~ What gives the MI Any Authority?

By
Real Estate Broker/Owner with TPR Properties DRE# 01842738

After the Short Sale Process

Even though it may look like it, this is NOT a picture of a dog that just finished Negotiating a SHORT SALE on a property with 2 mortgages and Mortgage Insurance. This is a picture of a dog that tried to eat a Porcupine.  Ever feel like this dog?

So currently, I am working a Short Sale where there are 2 purchase money mortgages.  The property once worth $360,000 is not worth a whopping $165,000.  The investor on both is Fannie Mae.  They have approved the transaction to move forward.  HOWEVER, the Lender Paid Mortgage Insurance Company is seeking $13,000 for the second which is 20% of the note.  Fannie approves a max of 6% per guidelines which is closer to $3800.  Bank of America closes the file within 24 hours of receiving that request from the MI company.  ... ... ... ... Sound Familiar to anyone??

Human Hampster Wheel

Even though it may look like it, this is NOT a picture of a dog that just finished Negotiating a SHORT SALE on a property with 2 mortgages and Mortgage Insurance. This is a picture of a dog that is STILL trying to Negotiate a SHORT SALE on a property with 2 mortgages and Mortgage Insurance .  Ever feel like this dog?!!!...

What I don't understand is where do MI Companies (Especially Lender Paid) get the power to hold up a short sale.  They do not have a lien on the property shown on title.  They do not have an Executed Assignment of Mortgage.  Fannie Mae has said verbally multiple that the MI company cannot prevent this approval.  Yet, Bank of America seems to think that they do have this Authority.  If it forecloses, there will be no recourse in the state of CA for the 2nd or the LPMI as both notes were purchase money.  I just don't get it some days.  And so...  We are back to the dog pictures.

 Is NAR working on this for us?  Congress is not because they are too busy with Debt Ceilings and what not...  Anybody???  I'll let you know how the story ends!!

 7/25/2011 - UPDATE

Still battling.  Servicer (Bank of America) will not provide borrower or me with contact information regarding the MI Company.  Have taken the file to the office of the VP fro the Short Sale Division.  Still no progress.  Interesting that from a business perspective for the MI Company it make no sense to refuse any amount that would help to mitigate their payout loss. 

 

 

 

Comments (2)

Mike Morrison
Will & Will Real Estate Brokers, The Woodlands, Texas - Houston, TX

Ken- Start digging. The answer is simple. Start with the MI Co's. look at who in financial trouble. Follow the money and you will see in some cases that the lenders & MI's are connected. Nice profit center with lender single interest MI.

The MI co's. gave AAA ratings to all the crap mbs that the TBTF's sold to investors. Take a look at livinglies.wordpress.com there is a ton of info there to answer your questions.

Jul 12, 2011 05:21 PM
Ken Patterson
TPR Properties - Rocklin, CA
Roseville Real Estate, TOP Rocklin Realtor

Thanks Mike!  I'll check it out.  You are spot on with the MI companies being in bed with the Banks.  Not sure what TBTF's are though.  LoL!

Jul 14, 2011 10:18 AM