Short Sale And PMI
A friend wants to buy another friends house by using the short sale method and then sell it back at a lower cost. I say no can do because the lender can go after the original owner for the difference in the sale amount. The buyer says thats what PMI is for and they'll take care of this. I don't believe this is true, the house is in Washington State, does anyone have a solid answer?????
Thx,
reverse gere[ Edited by reversegere1 on Date 02/16/2004 ]
Hi there
You can short a mortgage with PMI, as I have done it.
The owner is mistaken from what I understand they think the PMI will pay for the whole mortgage? The PMI just covers the top of the mortgage. So if you take a 90% loan they cover the top 10%.
When shorting PMI I worked between the lender and the insurer and the lender let the insurer decide on the acceptance of the deal. It was difficult, but I was able to make my case.
Alway ask the lender to waive the deficiency, if the can legally go after it in your state.
Hope this helps,
Rachelle
Quote:
On 2004-02-16 17:08, reversegere1 wrote:
A friend wants to buy another friends house by using the short sale method and then sell it back at a lower cost...
One important thing to remember if your friend goes forward with this . . . banks will not do a SS with a "favored party", i.e. friends, family members, coworkers, business associates, etc., so it's best for your friend to represent him/herself as an investor who was contacted by the homeowner.
Cheers,
Storm