Short Sale approval at $150k- letter from BofA   - no deficiency on the first

2nd is also with BofA (however there is Private Mortgage Insurance)

PMI approved the short sale also but with the Seller's signing a prom note for $32k

 

Seller's asked the Buyer to increase offer....Buyer's said no.....Seller's put back on the market at $179k

 

Seller's received full price offer in 3 days.....when we approached the negotiator.....she said there is no way in the world the 1st mortgage will allow the additional money go to the PMI company....even though higher offer - and even though 2nd will be paid in full by the PMI.....she said she will decline the file

 

Any ideas how to make this work?  

 

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Not likely it will work, the first is in the drivers seat and most likely will not agree to this
Rodney, have you approached the mi company about reducing their demand to a smaller amount or a lumpsumfrom the seller
To clarify, its actually LENDER paid MI, PMI is borrower paid..is the file HAFA eligible? That's one way to avoid the promissory. And yes, the first is in control, senior lien has all the say, unless HAFA, then any other lien gets 6K, nothing more.

it is MI - it is Lender paid...that is what we found out...Seller was unaware of PMI because they put 20%down...

you are right!  again, I just thought they kept leaving the "P" out

 

Hah, it happens every time..borrower is LIVID when they determine this insurance they don't remember signing up for is demanding money to complete the transaction. 

 

It is the BANKS security policy, in case of default. What is your thoughts on HAFA? Is there a FCL date? Is the mortage funded on or before January 1, 2009? Is it a single unit? It takes alot longer to complete, HAFA vendors tend to have less experienced reps working for them, but if you can take that route, the MI is shit outta luck..worth looking into. If not, attempt B of A's CoOP program, unless your dealing with Fannie, they have their own CoOp program.

I'm going to place this in the newsletter today to see what kind of responses we can get.

Unfortunatley this is yet another tactic by BOFA to be unethical and kill the dela nd get the borrower to give them more money.Lender paid MI still has to be disclosed to the borrower. It can only be place on the loan at origination with full disclosure to the borrowers as if the lender is paying for it for insurance of the lender to hedge their loss, most likley the borrower is paying a higher interest rate and thats all that MUST be disclosed.

 

I had a same situation last year with BOFA and they my client had a 80/20 with a lender paid MI on the second????? WTF???

he never knew and he was shocked. they asked him to sign a prom for $34k and come in with $15k cash which eh did as he wanted out of the house badly.

then they said MI wouldnt release the deficicncy which was total BS as he paid the second in full with cash and prom note.

 

To make teh story short, the got every thing cleared and closed, after 6 months we went back to the MI company to settle for cent on the $$$$$? Guess what

 

The PMI company said they could not settle because BOF has never filed a claim??? we asked why not since its been 8 months and they couldn't answer.  we escalated and then went back through claims at the MI and we were informed that BOFA and the PMI had some sort of a litigation and they had settled out of the court and it be probably never filed, until then dont make any more payments and we will be in touch??????

 

I have advised my client to get a get real estate attorney and sue the hell out of BOFA for misrepresentation and unethical practices as they are nothing but BUNCH of scum bags there. If it was an agent saying some thing that wasn't sure of they would of jumped on them for FRAUD, the bank is obviously committing a MAJOR fraud by saying they have MI in place which probably is not the case. We called for months through customer service and noone could find the MI paid by the lender info but the loss mitigation department.

 

It was a first and second both by BOFA. funny part is BOFA was servicing the first for Wells Fargo and own the second on their portfolio so they had no interest of writing that mortgage down on their books as it would effect their balance sheets, so that another conflict with the 1st and the 2nd as there were not representing their first position properly because they owned the second and had no interest of doing the short sale unless they got fully paid so they could justify the accounting for their books and cover up their LIES and Frauds.

 

 

B of A (in first) will generally allow up to 6% to go to the second lien holder .

If you are in an anti-deficiency state you can threaten the 2nd with allowing it to go in to foreclosure.

 

As a buyers agent, I have heard from the other side in a transaction, that the 2nd worked out a lower promissory note payment from the seller prior to closing and the second got the 6% a closing . 

 

Remember that while both first and second are B of A they make decisions independently and the MI company can be different in both case.

 

As to the idea of approaching the MI company, has anyone ever been able to do that directly?  I thought that had to come from the banks negotiator.

 

I think you need to try to understand the rights and money flow of the various parties, primarily the MI Company in this case. Radian?  I doubt that this is a BofA issue.  It's probably more the economics of the MI policy.

My guess: The MI company has the right to approved the sale and may have the right to pursue, depending on state laws.  And, they are better off with a foreclosure. (I would be interested to from an MI lawyer in state.)

Why would the MI Company waive their (positive-value) right under the contract with the Trust/Ownerfor free?  Would you?

Have you looked at the stock performance of the MIs recently?  Eg, RDN, MTG

Lets see: I'm going bankrupt, I have an asset that has value, you can make money on my asset, I have addition costs if I give you my asset, buit you feel that I should give it to you for free, and you feel abused if I refused to do so.

This position is unlikely to achieve a successful negotiated outcome.

HAFA is most unlikely, as the MI must approve, btw.

Yes, you can talk to the MI, but it is a bit like talking to a tombstone, which actually I think I prefer, come to think of it.

There are a couple of approaches that may work.

(1) Very risky for buyer: (a) reduce the offer to $150,000. (b) Show $5,000 or whatever number BOA will allow, going to MI (c) Use the excess ($174,000) to pay off the mi company upfront prior to closing.  This way the majority of the mi does not hit the HUD as a closing payoff, but it may have to be reflected as POC.  All this would have to be disclosed.  I heard of this being done, but never tried it.  Buyer at risk.  Consult a lawyer. Buyer would need to feel very secure that the ss is going to occur. (2) Same as above, but have buyer (not seller) sign the promissory note, instead of actually paying it. The reason some of these absurd solutions work is because the lenders have tight boxes into which their deals must fall, so if it "looks" like its ok, it may just pass.  (3) BOA is probably using a 3rd party to negotiate for it - escalate to president's desk. (4) Negotiate directly with the mi company.

The MI company will almost certainly take considerably less money versus the $32k note.  I would suspect $5k-$7k is typical.  Any payments to the MI company can be made by the Buyer POC so as to avoid the Short Sale Lender's objections.

 

Point of clarification to an earlier post: "PMI" is an actual company that provides MI coverage.  MI  is the correct term to be used.  Then there is LPMI (Lender Paid), BPMI (Borrower Paid) and SFMI (Single Financed).  

I have had this happen as well.  I had luck canceling the file and then resubmitting with a new negotiator on Equator.  Maybe it is the negotiator more than B of A.  It sucks to start over but it worked for me.  They were asking for 10K note and 6K cash contribution with recourse on non-recourse loans in Ca.  So it was a big deal this worked out.

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