Made a cash offer on foreclosre (listing price) bank owner states that they will approve but must have the pmi approval from the original owner?

Asked by Erin Warren, Stafford County, VA Fri Feb 18, 2011

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Beth Masland, Agent, Camp Hill, PA
Fri Feb 18, 2011
Hi Erin,

Yes, I know it seems goofy but that is the way it is. The bank you are dealing with has indicated that they would like to accept your offer, but they also have to check with the company which provided the insurance (pmi) on the loan to the origonal owner. That pmi guaranteed the bank some level of protection against the situation in which they are now faced - that is taking an offer that will not pay off all the debt and accrued interest and fees on the property. The insurance (pmi) company also has a say in the acceptance of a contract and its terms since they also have a financial interest/obligation in this property.

Does this help your understanding at all? (The last one of these I did it took the pmi company about 2+ weeks to give us an answer.) Good luck to you - sounds like you are 3/4 of the way to a new home!

Take care,

Beth
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scott farmer, Agent, Scottsdale, AZ
Fri Feb 18, 2011
Dear Erin,

Right, the property had private mortgage insurance which means that the bank not only receives insurance money it also gets money from you usually for a tidy some. The bank will not approve your deal until they know what the bottom line numbers are going to be on the property and what their net is going to be. They will figure it out pretty fast though if they have a cash buyer. Be patient and you'll probably hear some hopefully good news soon.

Cheers,

Sandy F.
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