A major breakthrough in short sale progress has been a recent agreement between mortgage investors Fannie Mae and Freddie Mac with 9 of the major mortgage insurance companies that will remove one last minute hurdle of a Maine short sale approval.
The GSEs have made agreements with its mortgage insurers to complete short sales on loans held in house. this "delegated agreement", investor's servicers have authority to complete short sales that meet Fannie and Freddie critieria—without needing approval with the insurance companies. That clears a major hurdle: Mortgage insurance has always been an eleventh hour mishaps in short sale negotiations, and this will clear the path to a much smoother transaction for all parties involved.
For many short sale specialists and home owners who have completed the long and rocky road to a short sale approval in Maine and in any state, the last hurdle after getting a short sale approval has been the dreaded submission to mortgage insurance. Almost all mortgages have some sort of mortgage insurance on their loan product. The insurance protects the mortgage investor and entity that funded the loan in the event of default, the insurer will pay the majority of the loss on the investors behalf. In the short sale process, this means that although the short sale can be approved by the mortgage servicer and investor, like Bank of America and Fannie Mae, there is sometimes one final step to gaining approval and many times the Mortgage insurer has come back to the seller and asked for a contribution to their loss.
If the short sale is a short enough payoff, and the MI company is taking a major loss by making a payout to the investor, they can request cash from the seller or a promissory note in order for the sale to go through. Talk about insult to injury!
This is now a thing of the past in the State of Maine for short sale listings and now getting a short sale approval has become one step less complicated. This does not mean that banks cannot ask for a contribution, they can and almost usually will ask the seller to make a payment or sign a note, but this is where a Maine short sale specialist who knows how to negotiate with these lien holders will help you accomplish your short sale goals.
PLEASE SCREEN YOUR SHORT SALE SPECIALIST IN THE STATE OF MAINE PRIOR TO LISTING WITH THEM
1. How many short sales have they closed and had the deficiency waived?
2. What is their strategy for making process close in under 90 days. (including buyer financing)
3. How do they "pre negotiate" with the mortgage company prior to the approval submission?
4. Are they just putting up a sign and out sourcing the loss mitigation and short sale negotiation to a 3rd party? (a tactic common and frowned upon by banks)