PMI and Promissory note on short sale March 11, 2010Posted by orlandoshortsalefl in FHA and MI short sale, Mortgage insurance and short sales, Orlando Short Sale, PMI, PMI and promissory note, Promissory note, short sale PMI, Stop foreclosure.
Tags: FHA and MI or mortgage insurance, Foreclosure, Orlando PMI short sale, PMI and promissory note, Short sale with PMI, short sale with private mortgage insurance, Short sale with promissory note
I have been asked this question three times this week so I wanted to post my experience with PMI and a short sale. Don’t let any agent tell you that PMI is a deal killer, In my experience it is NOT.
First of all not all of you will have Private mortgage insurance (PMI)on your loan. FHA is called Mortgage Insurance (MI). This only applies to the first lien. I ask each and every client if they have PMI. If your agent does not ask you, make sure you tell them.
The reason this is important is PMI can hold up a short sale just like a 1st or 2nd mortgage can. Also make sure the agent does not make a big deal out of this with the bank. Why, because I have had clients with PMI and the PMI company did not ask for a thing and we closed. Another little know fact with the PMI company, they will negotiate if asked.
Most agents do not know enough to ask or when they are confronted with a promissory note they say OK. Wrong answer, I always get my clients the best possible terms and outcome for a short sale. This is what experience will get you. I have negotiated with the PMI companies with a favorable outcome each time.
Most likely if they ask for a promissory note they will not back down on getting one. However they will negotiate the note down. The note is usually 0% for blank number of months. The months can be negotiated as well. The PMI company will pay out to the first lender so they want some money back from you.
This next part is not tax or legal advice. I always recommend my clients speak with an accountant or attorney. I will however give you my opinion, I am not recommending this either, OK here goes. A promissory note is unsecured debt just like a credit card. The lender has released you from the mortgage as this was a secured debt. If you take the promissory note and pay on it for a while. You could and again I am not recommending this but you could re-negotiate the amount with the holder of the prom note. I know of some people who have done this successfully. Disclaimer, I am not giving you tax or legal advice. Just a thought…
If you have a short sale in Florida I can and will negotiate the PMI as well. We will need to list your home and if needed contact the PMI lender to negotiate. If you hire another agent make sure they have negotiated PMI. This is not the same as a negotiation with the bank. The PMI lender may also want to speak with you as the homeowner. Before you agree to anything talk to your agent, and or your attorney.
When you hire an agent ask them to show you their approval letters or some of their closed sales. You want to have an expert on your side. Wendy and I have this and we have the documentation to back it up. Remember foreclosure is the last resort. Contact me at www.scottnwendy.com or email@example.com or you can use my 24 hour recorded info hotline 1-866-647-8425 EXT 104