Hi, all. I am working on a short sale with PMI involved. Is there a way to make it a deal and increase my chance for success or is this a deal not even worth doing? TIA.
I think PMI will increase your chances as that is the isurance for the first lien holder. If the mortgagee do not pay… pmi will have to pay some amount to lender. Talk to one of the lender and ask them directly. I think you have better chance then without PMI.
Thanks for the reply, DFW. Unfortunately, there is only one lien holder, the first mortgage holder. Will PMI then insure them to 80% of the BPO/appraisal and I have to beat that price?
Is this an FHA loan? Also, the bank may typically take 82% of the BPO. I don’t think that would be a big deal for them since they would get reimbursed 20% from the PMI.
It is not FHA. It is a conventional loan with PMI. The sellers said that their loan is paid down to about 86% LTV. They owe about $166,500 and it would cost $4600 to bring the loan current. I believe the house is only worth $120,000 because of its very rural location. It’s been listed with a Realtor, my broker in charge, since July with very little interest in it. If the BPO came in at $120,000, my own maximum allowable offer could be at most $84,000 (70% of the after-repaired value). The house is in excellent condition so I’m not going to even try to fool the bank into thinking that repairs should drive down the price. The only other thing I can use is that I’m submitting my offer before it goes to an attorney to begin the foreclosure procedure. I heard that once it goes to the attorney, the bank can count on losing about $30,000 to $35,000 on average but I’m not sure how true this is.