Stay away from PMI deals!

Just want to advise you guys to stay away from short sales that involve PMI!
The lender doesn’t need to deal with you because any loss (depending on % coverage) will be covered by the PMI company AFTER the foreclosure sale!
Make sure this is one of the first questions you ask when dealing with an upside down homeowner!

does it still effect there credit the same way?

Thats kind of right. I made some detailed posts about PMI a year or two ago explaining how they work and why.

PMI = Primary Mortgage Insurance. It’s an insurance policy that is only payable should the mortgage go into default. The reason the short sale acceptance rate is next to nil on mortgages with PMI is because it off sets the loss of the bank, but does NOT cover 100% of their loss. So it is still possible to complete a short sale on a mortgage that does have PMI, just not practical. It is more than often a waist of time for the standard short sale negotiator because it puts the purchase price higher than what we need / want / expect.

It’s next to impossible to calculate the policy because it doesn’t account for the entire loan, rather it only pays out a small percentage of the loan, up to 30%. So basically, take your short sale offer and add 30% of the original default amount to it and that’s the number you have to work with, rather than the total of the mortgage debt. Unless your Short Sale offer nets the bank more than what they would otherwise get from the PMI payout they simply wont accept your offer.

After doing a fair number of short sale negotiations with an without PMI I realized that although possible, it wasn’t worth my time and effort for the payout in the end. Generally speaking.

GooD LucK! :beer

You are so correct!
The servicer of the lender that has this deal told me thay would have readily accepted my offer, but since the mortgage had PMI, they didn’t have to deal because the PMI company would cover their losses!

PMI = Private Mortgage Insurance (rather than ‘Primary’)…


I have approved quite a few with good spreads where they had PMI. I dealt directly with the pmi company.

Do you have any contacts with RMIC? They are the PMI company!

I stand corrected, you are correct. I sometimes count …4,5,6,8,7,9… too! :rolleyes

If you owed more than 80% on your home when you bought it chances are you have PMI. Call you lender. Check your statements. Look at your loan documents. We generally as others posted negotiate directly with the PMI or MI agencies as they are the ones pulling the strings when the banks have their risk mitigated by having insurance coverage on their mortgages.

We suggest that you look to find a professional that may assist you with your situation. If you have any further questions feel free to reach me by Private Message.