We've been working a Bank of America short sale for nearly a year now. Offers continue to be rejected when we get down close to approval.

Currently, we have a cash offer and the seller has agreed to a $16,500 promissory note. Terms were agreed upon in Equator, and we were expecting an approval letter.

Received a phone call from the negotiator on the other side who was incredibly apologetic.. stated that she had been fighting with the MI company as they suddenly rejected our offer and countered back $10,000 higher. The buyer is unwilling to match, and is completely justified in refusing. The property is not worth the $70,000 the bank is asking.. we have provided numerous comparables justifying the $60,000 purchase price.

This unit is a 2/1 built in the 70's. There are multiple 3/2's with more living area, much newer, that have sold or sold for +/- $2,000 of our $60,000 purchase price.

It seems that the MI company simply does not want to deal. We have been given a firm "accept the $70,000 offer or it will be declined", and are now stuck as to where to go from here. Is there a way to get the MI to deal? This just seems bizarre.. Bank of America's negotiator has been incredibly apologetic since the MI company's last-second rejection and counter offer, but obviously that does not help us out.

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Hi Gordon. I would escalate to the Bank of America twiiter team @BofA_Help Just send them a message and let them know you need help with a short sale. They will call you for details.

I will try that, thank you.

Gordon,

do you know who the MI company is?

I do not, I could not find anything using the MERS search.

Would a MI company deal directly with me?

In my experience, yes, most of them will.

 

If I see there was less than 20% down at purchase (without a piggyback) or if I see the servicer changing since the loan was issued, I assume there is MI either paid for by the seller or added by the new lender when they bought the loan. I call the servicer and ask, REPEATEDLY, because you have to find the rep that hasn't got them memo not to give out this critical information. Get the MI company and the mortgage certificate number (it's like the account number for MI)

I also ask for it in a qualified written request (search for that on this site if you don't know what that means).

 

You might even ask the mortgage broker / loan officer that gave them the loan, if the MI was put on because the downpayment was below 20%.

 

Last but not least, when the negotiator starts blaming the mortgage insurer for the problem, I ask them "which MI company?" Usually, even at a bank, blaming a ghost company seems a little rediculous and I get the info I've been asking for all along.

 

I suppose if completely thwarted you could fax in a LOA to each of the companies and call down the list until one of them admits they're insuring this loan.

 

Probably, your target should be the Investor, more than the Insurer.  And, the Investor probably isn't BofA.

In my view, these are fights between the Investor and the Insurer.  The Insurer controls, and they may be better off under the foreclosure.  If so, they have no incentive to deal. By contrast, the Investor is getting a partial payment from the Insurer, after the sale.  The Investor is probably better off under the sale than the foreclosure.

Hence, the Investor is more likely to have the incentive to accommodate.  You may need the Investor to agree to reduce their claim on the Insurer, in return for completing the transaction, thereby getting money to the Insurer.

Not saying I know how you get there...that is the tough part, I think.

I agree.  Chances are the investor doesn't even know this is going on.  With Fannie & Freddie I have had success getting them involved and negotiating directly with the MI company for a claim reduction.

I would work 2 angles:

1) Escalate to everyone.  BofA Twitter Help, the investor and  try to get the MI company info and work with them if you can.   

2) Have the seller re-write the hardship letter.  These scenarios have much more to do with the perceived borrower financial strength than the property.

I hope this helps - good luck!

Thank you Erik and everyone else for the replies. We've begun escalation via the Twitter team. Will continue to research until we make some progress.

Great info Erik,

Can you post the names of the 5 major MI companies?

Thanks,

Tni

Wow Erik... you are the man!

Thank you!

Tni

if the investor calculates that they can make more by foreclosing, sometimes they simply will not approve the short sale.  It's a fact of life but fortunately it's rare.  Escalate but understand that sometimes they do not want the deal at any price.

xx

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