Need Experienced Input "outside the box"

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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Permalink Reply by Julianne Thorne on June 26, 2011 at 9:17am
What did the house appraise for? It is possible to negotiate the prom note still. Did so myself - same scenario with BoA. Did so by having the buyer's lender get their appraisal to dis-prove the BoA BPO....Or does the buyer really have a "stealing price' on this property...? 
Permalink Reply by Heidi Skinner on June 27, 2011 at 11:21am
It's tricky with MI because their payout is determined by the sales price so it has to be a separate line item... See if you can do a "Buyer Credit towards seller's closing costs" on the buyer side of the hud, and "Seller Contribution to MI" on the seller side... we've had this approved several times.
Permalink Reply by Dave Jezierski on July 8, 2011 at 11:36am

WOAH! DO NOT COUNSEL BUYER TO MAKE PAYMENTS OUTSIDE OF THE HUD!  Loan fraud equals jail time. The Seller can make a payment to their 2nd, as they are account holders, but not a buyer on a sellers account.  Let me preface this with this, I am not an attorney, please confirm with a BK attorney. I would advise the seller to take the $32k prom note. They are 0% interest, and a prom note is now "consumer debt" and can be included in a BK down the road. You can try to reduce the prom note, but lets get serious, I have been doing these successfully since 2006, and MI companies are pretty firm. If the seller files a BK, who cares how big the prom note is.

As far as being in a non-deficiency state, doesn't matter when MI is involved. The reason a 2nd has MI is if it is foreclosed on, the 2nd will generally get 10% of the note from the insurance payout from the MI company. Let me guess, they 2nd is $32k....  The MI company wants the 3% or 6% whatever the 1st is willing to let go to them, and they want their 10% payment reimbursed.

 

Again, take the prom note, it is cheaper than dealing with a foreclosure on the sellers credit report in the long run

Permalink Reply by Stephen B. McWilliam on July 8, 2011 at 11:39am
Payments can be made by the buyer to the junior lien hold.  The funds are not considered in the financials on the HUD-1.  They are disclosed on the HUD-1 as POA (paid outside closing).  Totally disclosed, totally legal.
Permalink Reply by Dave Jezierski on July 8, 2011 at 12:01pm

Yes, as long as they are disclosed on the HUD it is legal. Not being negative, just realistic, try to get the buyers lender to approve that the buyer is forking over $32k to a junior lien holder on the sellers account. On top of that, try to get the 1st to approve the HUD for closing with that payment going to the 2nd disclosed on the HUD for all the world to see.  When a 1st says $3k or $6k to go to a 2nd, that what they mean, period.  I am all for making thins work, but not pie in the sky, keep it real, keep is even keel, keep everyone's expectations in the proper context.  Again, take the prom note, move on, if it becomes a problem, file a BK with all of your other consumer debt.

 

Just a side note, a Foreclosure will tank a security clearance, that means loss of a job, and reduction in pay at a lower position. Prom note is infinitely less impactfull to the seller than a foreclosure in more ways than one.

Permalink Reply by Heidi Skinner on July 8, 2011 at 12:17pm
I'm not sure what you're referencing as far as payments off of the hud from a buyer anyway.  If you're referring to my post, I think you misunderstood it.
Permalink Reply by Dave Jezierski on July 8, 2011 at 12:51pm

Nope, no worries, I was referencing the main question, and then another post said to have the buyer pay it off the HUD.

Permalink Reply by Jackie Kumm on July 10, 2011 at 4:32am
you don't need the first's approval anymore if you have enough to pay the first mortgage in full.  It's the 2nd that that is your issue.  I suggest that you show BOA 2nd the loss later vs loss now value report.  Make sure you cover costs of future BPOs,.  deteriation of the property ect.

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