This is new to me: my short sale offer was denied by the insurance company - not the bank. And their reasoning was it would be in their “best interest.”
So I contacted the sellers’ homeowners insurance company (Allstate) & they said it may be the banks’ insurance company because when there’s a vacant property involved, Allstate is all for a quick sale.
I really don’t know where to go from here. Any suggestions?
Thanks in advance.
maybe by insurance company you mean the private mortgage insurer?
Ahhh. Maybe that’s it. How do I get a hold of them? And why in the world would they deny a short sale?
Well I’m no expert on PMI payouts but if they have provided PMI on the loan you are trying to short sale then the more money the bank loses on the deal may translate into more money they will have to pay on the policy. Again, the making of a claim on a PMI policy is a mystery to me.
PMI guarantees the loan down to 80% of the value of the house at the time it was bought. If prices are stable in your area, the PMI company is thinking the seller can get a better price and they wont have to pay the claim.
In a short sale, they look at the owner’s ability to keep making payments. Obviously they feel the owner can afford to keep making payments and wait for a better offer.
Okay. Makes sense. Is the bank bound at that 80% then? In other words, should I expect the bank to accept anything less than 80% if I offer more than I am right now? If so, it’s a deal breaker. Thanks for the insight.