Replies to This Discussion

Permalink Reply by Janine Donelon on September 15, 2010 at 12:04pm

Sherilee, the same scenario happened to me, representing the seller with Hancock Bank in MS. One loan, PMI wanted 20K by having the sellers sign a promissory note. I told them that the sellers situation had deteriorated further and the negotiator for Hancock asked for an updated hardship letter and financials to resubmit. PMI ended up waiving their fee. If the sellers situation has not improved, ask the negotiator if you can send in updated financials as the seller is unable to pay and will have to foreclose.

Permalink Reply by Kyle Souza on September 15, 2010 at 12:13pm

I was told by a negotiator at BAC that Freddie forces them to request contributions from the sellers. WF does the same thing. Have the borrower/seller write a letter and prove that they can't contribute and they should review and waive if explanation is supported. I've had them ask for a contribution when her only income is food stamps!!!

Permalink Reply by Luis on September 15, 2010 at 2:19pm

The MI company reviews your borrowers financials , If the borrower makes sufficient income and has money left over after expenses 9-10 times the MI co will ask for a contribution. My advise is to accept it as it is an unsecured note. By accepting your borrower will avoid a FC. If your borrowers financial situation continues to worsen after agreeing to the note and making a few payments, then he will stop making payments and the worst that can happen is collection activity in which again better than a FC!! Good Luck!!

Permalink Reply by joe beauchamp on September 16, 2010 at 3:46am

More frequently than not it is a lie. From time to time, BofA people get credit and collections talks on how to make more money. That is bad, but a lot of what that management does hurts the bank. This is one of the tactics - seller cash and note. I have caught them lying about MI that wasn't there - they still have not backed down - I'm currently going directly to Fannie Mae on that one and don't expect them to lift a finger (has not happened yet for me).

If there is an MI, try to get the info - BofA will illegally withhold it from you (the legal rep for the borrower), but what are you going to do, sue? Get it from customer service - worse case, you need the seller to call in to get it because, again, illegally, BofA will ignore any POA or autho that you have. This is truth in lending and they are violating it by claiming some undescribed entity is owed money by the seller - like who, the negotiator's Uncle Bozzo? Illegal. You will only get somewhere with that by going up the chain and demanding names to give to the D.A. for criminal prosecution.

I, so far, have found the MI's easy to talk to, not pinheads (so far). If your argument is decent, you have a better chance with them than braindead negotiators at BofA following the "this is how you squeeze lots of $$"). It doesn't hurt to let them know that you are going directly to the MI / investor. Makes them sit up.

Get the financial picture for the seller in solid. The MI (assuming that you really have one) is looking at the credit history, bank statements and financial info submitted (and, believe it or not, the hardship letter is very very important). Most of my sellers just jot something down - way off. So, what do you expect when the MI sees that the seller is making $5K/mo more than they are spending -- hmmm.. lost a lot of money, I think he should be paying a lot of that back with all his income.

Credit history show he is paying off a dozen cards, other debts? Doesn't look good for you. Guy has $100K in a slush fund account that they know about? Bank statement shows mysterious large sums going in and out? Duh, someone is playing games.. Well, usually, it is a seller who doesn't know that being accurate with that stuff is important (so far as financials and explaining funny checks and deposits). So, do you actually have someone broke here?

The MI's that I've dealt with (indirectly, so far) have understood when I corrected and pointed out that the seller is dead broke. In the current one where the Team Lead and negotiator are just plain lying, they continue to demand money from someone who owes $2K more per month than is coming in and when I checked her financials, she was -$320 in her bank account - and they want $2700 from her - still. I've told them since July, it ain't there - they don't care.

Oh, and if you talk with MI and it seems downhill, if you get to the point of saying, "too bad, house is yours then", also point out that THEY will be paying the brunt of the loss because of this demand, not the investor or the bank.

And, if your seller is dead broke, Go ahead and take the note and then do a BK and it goes bye bye. On the other hand, I'd love to have some of my credit accounts be $20K note at 0% interest at $50/mo until paid off - Cool!

Good luck.

Permalink Reply by Ed Clements SFR, HELP Certified on September 16, 2010 at 5:25am

I told the negotiator my client was loosing his job, his wife is in the military and stationed over 200 miles away and he was going to move there to be with his family and they declined the short sale due to the MI. It was ridiculous the MI Co wanted $125 an month for 20 years. The sellers said, no thanks.

Permalink Reply by joe beauchamp on September 16, 2010 at 8:34am

Ed, that is an interesting result. The sellers preferred to have the original note for many thousand more continuing to accrue interest and also accrue more debt from this house until it finally went away in foreclosure than to get a much lesser note at 0% interest and actually have it help build up their credit? Let me see if I can make my calculator take that one and make sense out of it... Hmmm... ;-)

If it is still sitting, have you/they tried deed in lieu of foreclosure?

Also, much of the time, the negotiator trots out "the boogieman MI" and it isn't there. Getting the MI info and talking to them directly could give you a super result. To MI, usually, the seller's finances and hardship are the biggest things.

Worst case, they could have done the short sale, signed the note and then BK - which they can do anyway, but everyone else involved would get something for their efforts.

Permalink Reply by Vito Lotta on September 23, 2010 at 8:03am

I have came across this with one of my BofA short sales. MI company was asking for 30,000. The negotiator that I was working with at BofA decided not to submit my clients hardship to the MI company. I found this out by tracking down who the MI company was and who the negotiator was at the MI company that had the file. When I reached him and asked him how they expect my client who has had knee replacement surgery, has lost his job and is now working part time to sign a 30,000 note. His reply "we didn't receive any hardship information form BofA".

Your best option is contact that MI company and make sure they are fully aware of your clients hardship.