In my last post I had mentioned that I was dealing with a PMI (private mortgage insurance) company during my short sale negotiations. Some of you guys didn’t realize that this was one of the entities involved in the decision making. PMI is almost always required when the home is purchased with less than 20% down and is paid for by the home buyer BUT it can also be purchased by the lender even if the down payment was 20% or more. If you are dealing with short sales this is one of the first questions you want to ask the lender, “Is there PMI Insurance?”. It affects the negotiations, so you need to know.
There are actually 3 entities that may have an interest in the negotiations, the Lender, the PMI Company and the Investor. The Investor could be Fannie Mae or Freddy Mac or any of the other secondary mortgage market Investors.
If there is PMI and an Investor involved it has been my experience that the PMI Company has the most weight in whether or not the deal will be accepted. This makes sense since they are the ones that have insured the loan. The Lender will usually accept what the PMI Company approves. If Freddy Mac or another Investor is involved they too have to OK the deal after the PMI Company. I haven’t dealt with FHA or VA yet but I’m sure their process will be similar. I hope.
So there is much more involved in getting a short sale approved than just getting the Lender to accept the deal.
If you understand the process and know what you are doing, these deals are not complicated, they are just very time consuming. I am by no means a short sale expert, yet. But I am a very quick learner and I’m getting better at them everyday. Short Sales do not have to suck!!!
Anyway, I hope this information helps you. Let me know if you have any questions and also let me know if you feel any of this information is incorrect. I don’t think it is but hey….I’ve been wrong before. I just can’t remember when. 🙂
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