I had a call today from a past short sale client who said a PMI company wants to meet with them and hear their story of the 3 times they tried to get a loan modification and were rejected (by Chase) - then had to do a short sale. This company is apparently frustrated that lenders aren't doing more modifications which leaves them paying out money and going broke. That's all I know for now. ANyone else heard of such meetings? I'm going to the meeting with my clients and will let you know what happens.
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Let's look at this another way. The MI company is not screwing up the deal, the lender/servicer/investor is screwing the deal. The lender is who is going to be paid a claim, they are holding an MI policy and the MI company is being required by the lender to pay a claim. The lender could EASILY waive the MI payment and not file the MI claim. Just like when you crash your car, it is not required that you file a claim, you can always fix it on your own dime.
Anyone think this could be the real issue?
Oh boy..another turn of the MI screw..
Hmmmmmmmmmmmm, I thought that the only time that the MI company pays out is if the home goes into Foreclosure. Correct me if I'm wrong but MI companies don't pay if the home is Short Sold. I very unclear as to why MI companies are holding up these deals. When does the MI company pay on the policy? Why wouldn't they pay out on a Short sale? The loan is taking a monetary hit? They may not have to pay as much but they should pay if the seller or lender is paying for this policy.
I have a deal right now where CITI and the investor have agreed to the short sale but the MI company is only allowing the 2nd lien $1K and that note is around $50K. The 2nd lien is GMAC and they won't accept anything less than $5K. This battle over $4K is holding up the deal from being approved and the seller is not allowed to contribute any of the funds to make up the difference.
does anyone have any insight into what I can do?
Sheila. MI covers a part of the investor's loss based on a percentage of the original loan amount, usually 20%-25%. Normally they pay out the same on foreclosure or short sale. Both are a loss and both are covered.
Bryan, that makes perfect sense! I have been doing short sales for almost 5 years now and only in the last year have MI companies been making these deals fall through. Do you think it is the accumulation of payouts over these years that has made them so demanding? I guess if you think about i, they will pay out the same amount if foreclosed or short sale, so they may as well try and get something from the seller right?
do you have any words of wisdom on the case I mentioned of mine? have you ever contacted the MI company first hand?
Update: The PMI rep told my clients she didn't want their realtor at their meeting but here's what I learned later: The PMI company is refusing to pay Chase because they said Chase refused to give my clients assistance (they applied for a loan mod 3 times). They were meeting with my clients to get proof of the lack of assistance. Fortunately my clients are very detailed and great at record-keeping. It also turned out they had been paying DOUBLE the amount of MIP required - maybe that's what triggered all this. My clients said the term 'predatory lending' was used. I asked if they might be getting some money out of this in the future and they said the rep told them 'maybe' -- so they said they won't hold their breath. They have been thru the wringer with Chase, as I know many people have. Will be interesting to see what comes of this.
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I dont think the 20% from an MI company is going to make or break the bank , the reason that servicers such as Chase do not modify is that they are better off just getting their fees for as long as possible .
I have recently seen letters from the actual Master Servicers on behalf of the CMO investor that they may be able to offer assisatnce despite being denied by the current servicer , ( in this case it was B of A , Master Servicer is IMPAQ )
Wow that's a new one - interesting to see how it turns out. Please keep us posted.
Interesting. I have always said that one reasons lenders don't do loan mods is because of they do they can't collect on the MI.
I had not heard of these meetings before but have no doubt they are taking place.