MI Company ~ Deficiency Claim on Borrower

We have a shortsale with Nationstar Loan Balance of $ 320,000 MI with United Guaranty.  Net payoff to Nationstar is $159,600.  United Guaranty wants $10,000 cash contiribution or a $25,000 unsecured note.  What has your experience been with United Guaranty and negotiating? Our clients have no funds and high credit card debt.  Do you know if United Guaranty will go after the borrower for the claim Nationstar makes? Does the MI have a set time period to go after this deficiency?  Thanks for your input!

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Permalink Reply by Jeff Payne on March 22, 2011 at 10:34am

I have found this all too common with MI companies and have started to feel that it is the lender that is requiring it an not necessarily the MI Company.   The lender is getting a claim paid to them from the MI company so naturally the MI company wants some of the proceeds from the sale.  If the bank would NOT take the claim or offer MI company a break for the short sale, maybe we would not see this happen.

I have worked out with United Guaranty directly before, they wanted $50,000 cash and I got it down to a $5,000 promissory note.  Go directly to them and bypass nationstar

Permalink Reply by Jeremy Eide on April 20, 2011 at 5:44am

jeff,

 

any pointers on who to contact at UG?  i have a name, just dont know where to start..

Permalink Reply by Cameron Piper - Keller Williams on April 20, 2011 at 6:25am

In MN the right to deficiency flows through the rights of the lien holder.  Therefore if you can get Nationstar to wave their right to pursue a deficiency judgement you will preclude United Guaranty from being able to do so as well.  I would check with your short sale attorney to find out if the same is true in your jurisdiction. 

 

-Make a settlement offer to the the MI company and see where it goes.

-Review the financials that were submitted to the bank for the short sale.  I find that oftens times they are outdated and don't hold at the time of short sale approval.  If there have been changes, resubmit your financials to the bank and also CC United Gauranty and see if your new circumstances don't change the offers.  I have had limited success with this approach.

 

Lastly, if the bank/MI won't budge I would ask you to consider whether the short sale is the best thing for the seller (not for you).  Signing the promissory note will likely preclude them from being able to bankrupt it in the future (possibility with high credit card debt) and if you are in a nondeficiency state - it sounds like it is better for the seller to let the property foreclose and walk away.

 

Cameron Piper

Coldwell Banker Burnet

 

 

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