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The negotiator on my "Fannie Mae" owned loan/property is saying the borrower has a MI on the property and all terms are being dictated by that company!

Let me back up. My seller is asking for a B of A short sale on his property and he is not delinquent. The hardship is not important here, but it is legit.

The first lien will be completely paid off at closing. The second lien will be getting $22,000 toward the $80,000 borrowed. We are short selling the second.

Borrowers put down 50% when then purchased the property ($200,000) and did not need mortgage insurance. I verified by checking their original loan docs. I had to, the B of A negotiator said his system said they had MI!!

During early stages of negotiating, the borrower was asked to pay  or sign a note for $6000 at closing. I know.... but after much questioning and frustration. they finally removed that condition. But. the commission was reduced to 4%. The negotiator will not budge and says he can't because that is what the MI is saying.

I emailed him the fannie mae commission guidelines and am contacting fannie mai directly. So I guess what I am looking for here is .... where do I go from here. Or.... has anyone else come across any situations like this.

Could I be wrong, could there be MI insurance and the borrower is unaware of it? I am at a loss and frustrated.

Thanks for the time to read this and help me out!!