I believe some mortgage insurance companies are starting to feel the crunch. I was recently informed by three separate MI companies that sellers with investment properties will be asked to sign unsecured notes. Notes range from 10% of outstanding principal balance to less than .08% based upon the following:
Credit report review. Is the borrower is paying all other debts? Credit report shows current with ALL other obligations.
Property occupied by tenant. Is the borrower still collecting rent and not paying the mortgage? Why is the borrower not paying the mortgage if rent is being paid.
Borrower Bank Statement. Does the borrower show deposits. Extra money besides current pay.
Borrower Purchase History. Is the borrower living above the level of someone experiancing a hardship i.e. recently purchased another vehicle, debts for night clubs, cruise ship spending etc.
These are just a few examples that Radian and a few other companies expressed as the number one reason MI companies are demanding notes. I was also informed that borrowers who don't comply with the discounted short sale and note terms will face collections and deficienciey judgements according to their state laws.
I understand their position and if you look over the recent stock tickers for major MI companies you will see they are starting for feel losses greater than one could have ever thought. I agree with the MI companies requesting some type committment from the borrowers. The borrower is getting out of a situation much greater than the small note being requested.
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