Replies to This Discussion

Permalink Reply by Katerina Gasset on July 30, 2010 at 6:20pm

Dianne- When the market was tumbling the lenders started getting mortgage insurance on their notes. They do not have to tell the homeowner that they are getting it since the lender is paying for it. It happens a lot.
I don't understand why the seller won't sign the promissory note, there are SO Many benefits for him to do so.
How much does he owe in total?
Promissory notes are like renegotiating the note. If they release their claim on the note, give a satisfaction of mortgage and record that with the county- then the promissory note becomes the part that can be pursued instead of the original amount. THis is also a great way to rebuild credit. I don't get these sellers who refuse to accept great terms like paying off a debt that they own for less than 50 cents on the dollar.
We ALWAYS assume there is MI on the short sales and add $5000 to the HUD to pay MI.

Permalink Reply by Dianne Slutsky on July 30, 2010 at 6:34pm

Actually, I do not feel that the lenders have any right to demand that a home owner pay for something that the lender purchased to benefit the lender not the owner. The seller does not feel that he owes it because it was never disclosed until the last five months. The seller already has existing trade lines that he can use to rebuild his credit but he does not want to pay $150 a month for 20 years. I do agree that more sellers should be willing to sign notes as long as they were aware of the debt and have the ability to pay. Thank you for confirming that lenders did put mortgage insurance on loans without the knowledge of the owners during the beginning of the crisis. It is too bad that homeowners did not have the ability to buy insurance to protect them when their values proceeded to fall 50%.

Katerina Gasset said:

Dianne- When the market was tumbling the lenders started getting mortgage insurance on their notes. They do not have to tell the homeowner that they are getting it since the lender is paying for it. It happens a lot.
I don't understand why the seller won't sign the promissory note, there are SO Many benefits for him to do so.
How much does he owe in total?
Promissory notes are like renegotiating the note. If they release their claim on the note, give a satisfaction of mortgage and record that with the county- then the promissory note becomes the part that can be pursued instead of the original amount. THis is also a great way to rebuild credit. I don't get these sellers who refuse to accept great terms like paying off a debt that they own for less than 50 cents on the dollar.
We ALWAYS assume there is MI on the short sales and add $5000 to the HUD to pay MI.

Permalink Reply by Lori Young on July 31, 2010 at 3:42am

I tell them the borrower won't sign. Never had a problem. Put zero on the worksheet. May have to upload an updated hardship specifically for the mi.

Permalink Reply by Jeff Payne on July 31, 2010 at 4:34am

Dianne, Listen to what Katerina has to say...... Keep in mind that your borrower already signed a promissory note when they bought the house. Now they have the chance to lose the larger promissory note for a much smaller one. Mortgage insurance is just a small hurdle, go straight to the mortgage insurer and negotiate with them. I had one recently that we negotiated a $50,000 prom note down to a $5000 contribution because we went straight to the MI company.
At some point you may have to cut your losses if you have been working on this for 26 months and if your seller is not willing to pay $150 per month to be able to short sale. What does the seller have to lose other than a larger mortgage?

Permalink Reply by Dianne Slutsky on July 31, 2010 at 5:37am

We did tell the mortgage guarantee that the seller was unable to sign since he had just lost his job. When he told them that, they refused to release lien and BofA Equator denied the short sale. We will try again with this new offer

Lori Young said:

I tell them the borrower won't sign. Never had a problem. Put zero on the worksheet. May have to upload an updated hardship specifically for the mi.

Permalink Reply by joe beauchamp on August 1, 2010 at 11:06am

MI can just be. I was surprised to find one on a 2nd lien. What I learned was that the bank bought insurance for this loan. Seems like a bright thing to do, they charge a considerably higher percentage for the 2nd, why not put some of that into insurance since you are in a precarious position of 2nd place and still make money?

MI has too much clout, they usually don't consider that if they screw up the deal, they will be paying the 85% or so loss to the investor. The investor listens to MI because if they don't, MI won't pay out for the loss. So, everyone sort of quakes when MI struts around. MI seems to have 2 speeds, "Give me money" and "OK". I have found several times that the seller was sloppy with the hardship and financial info (did you notice that BofA doesn't have a place for liabilities, just assets?).

I've had them update their info, MI usually takes the info and my telling them that there is no money and listens. Then you go a 2nd round and you end up with another MI person - none of these people seem capable of actually reading the history or file data before doing another "give me money money money". So, I throw it at them again, ask them to take 30 seconds or so and actually read what is in front of them.

I think having new info is helpful - a reason for them to back down. But they don't always. I have 2 crippled old ladies and only 1 of them can now work part time - MI wanted them to bring $15K cash - as if they'd seen that kind of money in the last decade. I couldn't do their jobs - I have a moral and ethical issue with that. Got them down to $3K but it was a long hard fight. Still, they had to beg neighbors and relatives for the money. I'm sure that MI really needed that $3K a whole lot more than them. But, of course, they can legally try to get as much money out of these 2 ladies as they can.

Get those liabilities from the seller - owe $30K to credit card? Making payments to something that he forgot to enter? Anything of a decent story that should be added to the hardship? Do it, upload it, and tell them how it's crazy to expect someone taking in $4K/mo and paying out $6K/mo (or whatever) should somehow have money to toss at BofA, etc. Been using IRA money and savings to pay the bank? Say so.