BOA short sale approved but now MI co saying they can't approve due to seller ability to pay! Arrgghh
Triad. The same evil concubine continuing to wreck havoc on every short sale they touch.
Just learned from my negotiator at BOA that the MI co is denying the short sale due to the seller financial ability to pay the mortgage. Mortgage is 9 months behind. Seller hardship was divorce but he shows more than $150K on tax returns, some of which comes from other rentals, etc.
Paychecks & financials show more expenses than income but there is a funny line item on paychecks which show "options" from company which almost match his income for the year to date. However, these options also show an after tax deduction of almost 60%. I don't think the BOA negotiator or MI staffer reviewed this information in depth because these options for example have strike price restrictions, lost value, etc and I was never asked about them nor was it mentioned. I have learned who my MI contact person is and just sent over the TPA so we can discuss.
Has anyone been able to get a MI file reopened after it was shut down? Believe me I have no problem with being stubborn and the word "NO" is not in my vocabulary.
Thanks for any help.
Ed Petrie, MBA
Loss Mitigation Negotiator
iPower Source
Replies to This Discussion
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Permalink Reply by Maria Evans on
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Ed, I am sure they can reopen the file if they want. If the seller is willing to foreclosure property - and everybody doing a short sale must be willing to do so - it doesn't matter if he can pay the mortgage or not. MI company will have to pay the investor anyway. On a declining market if you don't work with today's offer next one will be lower. If the property foreclosures the bank will lose more money, not the MI Company who did the insurance for only up to 20% of the loan.
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Permalink Reply by Eddie Petrie on
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Thanks for the insight Maria. As an update the MI company refused to consider an alternative plan other than the seller paying their loss coverage ratio of 25% ($40,000.00). Since the seller is only late on 2 out of his 6 properties MI feels he can afford the mortgage payment even though his paychecks and all checking accounts show he barely breaks even and he has 3 properties with no renters.
I also prepared a full financial analysis for the MI co which of course had no effect. I also sent an email with the financial analysis to the MI company executives and directors asking for their review and assistance as well as a copy to the BOA Loss Mitigation VP (this was on Thursday). Now, out of the blue on Friday my BOA negotiator called me directly to say that maybe we could make an offer of say $5K in cash and another $5-10 in prom note. Told her the seller won't go for it (even though I know seller has $15K credit line which also shows on his credit report with $14K available).
I did some research and learned that Triad is operating on a "run off" mode and per their 10K reports their stock is taking a bath.
Regardless, the buyer had to walk on Friday and it is not known if I can get him back. However, at the end of the day the most important thing is to get the best deal for the seller. I will let you know what happens and thanks again for your response, I couldn't agree more.
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About MI Companies I think they are taking advantage of the fact most realtors don't understand that they don't have any leverage and therefore they play this game in conexion with the banks (investors). It is very important that the short sale makes sense from the investor's point of view. If the seller has money (hardship letter + credit), it makes very difficult for us to get an approval. I like Brent White opinions and it is worth to read his book: http://www.amazon.com/Underwater-Home-What-Should-Worth/dp/1456365703. If the hardship letter doesn't make sense I would not work on the short sale. Unless if the seller pays me ahead. Good luck!
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