we are in the processof buying a shortsale (MortgageInsurance) on it.The MI came back asking for $4000 seller is reluctant to pay . do we have pay it?

Asked by Sahi, Sacramento, CA Tue Sep 20, 2011

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, ,
Thu Sep 20, 2012
Good evening Sahi,

Read the advice from Jim Simms and Ron Thomas below. There you have two different viewpoints and both of them are valid and given to you by seasoned professionals with a superb reputation of posting accurate and honest information here on Trulia.com.

You've got the choice to pony up the extra cash if you want the house and think you're getting a deal or you have the choice to walk away. The Seller likely doesn't have the money to pay. Don't waste too much time deliberating on this matter; the short sale process is fluid and you may find yourself out of a deal altogether if you wait too long to respond.

Focus on your original research and decision to buy this home. If the VALUE of this purchase is worth a considerable amount to you---whether in real dollars or intangible benefits---that is the basis of your decision to pay or not to pay the extra $4,000.00.

Short sale counter-offers are the NORM, whether it be from the MI company or for paying some other item the Seller can't pay so a Buyer can close. This is the sticky mess you got yourself into when you decided to buy a short sale.

My advice is more brutal than either of my Trulia.com colleagues: walk away. I think short sales are a disaster for home buyers. But that's just me being blunt.

Whatever you decide, Good Luck!

Trevor Curran
NMLS #40140
2 votes
, ,
Thu Sep 20, 2012
Not unless you want the house for the agreed price plus $4000.

Jim Simms
NMLS # 6395
Financing Kentucky One Home at a Time
1 vote
Carol Perdew, Agent, Manteca, CA
Wed Sep 21, 2011

In my experience of working on short sales, the mortgage insurance companies are difficult to deal with. The mortgage insurance usually will not waiver from a fee they are requiring. They will push everyone so they get the money they are asking for. Mortgage insurance often will ruin a sale and prevent a closing.

The seller should consider paying this fee because the seller has a lot to lose if the short sale does not close and the property forecloses. If the seller does not have all of the $4,000.00, than you will have to decide how much you can contribute. In suggestions like this, all parties should work together to find the best solution for everyone. I hope you will be able to work this out!

Carol Perdew
Prudential California Realty
(209) 239-7979
DRE 985176
1 vote
Ron Thomas, Agent, Fresno, CA
Wed Sep 21, 2011
Please do not look at it as though you had THIS and now they want to take more:
You didn't HAVE anything.
No matter where the money goes, you need to invest $4000 more.
Are you getting a great price on the house?
If you add that $4000 to the loan, you will be paying about $15-$18 more a month, (check me on that)
Is it worth it to you; especially after you have come this far?
Check with your Tax man; you may be able to deduct that $4000.

Good luck and may God bless
1 vote
Keisha Mathe…, Agent, Elk Grove, CA
Tue Sep 20, 2011
You have a choice as to whether or not you pay it. However, if it is a requirement of the lienholder and cannot be negotiated away, it will be required to be paid (by someone) to satisfy the MI lien.

If possible, ask others on the transaction to spli the fee with you (seller and agents). If the home is worth it to you, pay it. If it isn't worth it you can always walk away. But if it is a requirement of the MI company to satisfy the lien, there is no way around it.

Hope that helps,

Keisha Mathews
"The Short Sale Lady"
Century 21 Landmark Network
(916) 370-1803
Lic# 01439130
1 vote
Jim Walker, Agent, Carmichael, CA
Thu Sep 20, 2012
The cost of buying a short sale is almost always higher than the advertised list price, or even the negotiated sales price. Short sale buyers need to learn this fact, understand this fact, expect this fact to be true, and to apply to their specific situation. The list price means nothing to the mortgage insurance company, bank or lien-holder, (except, maybe, as a starting point for their negotiation against the buyer )
0 votes
Robert McGui…, Agent, Denver, CO
Wed Jan 4, 2012

There are certain fees that some short sale banks are not allowed to pay per their agreements with their investors. If this is one of them, they will not budge and you will have to make a decision to pay it or not. A lot will depend on the negotiation with the bank and whether the home owner is willing to contribute. If not it has to be paid to close the transaction and you will be the last man on the totem pole. If so you may ask your lender and the short sale bank if the $4000 can be added to the sales price and become a part of the loan. That way it would cost you about $20-$25 per month instead of bringing cash. Hope it all works out for the best for you if you really want this home.

Robert McGuire ASR
Your Castle Real Estate
1776 S. Jackson St. #412
Denver CO 80210
Direct – 303-669-1246
0 votes
Jay Emerson, Agent, Fair Oaks, CA
Wed Sep 21, 2011
Do you want the house? Do you have $4K? Is it worth it to you? Will the seller split it with you? Has the listing agent even asked the seller?
0 votes
Becky A. Roe…, , Herald, CA
Tue Sep 20, 2011
The MI company and the selling bank are all trying to re-coup as much as their loss as possible. It is all part of the negotiations. There is lots that can change a deal in the shortsale process. If the sellers have any money in the bank, the bank will ask them to contribute. Sometimes to make a deal work the buyers will pay towards a 2nd or any number of things. It has to all be approved by the selling bank though. They don't always just let you pay. If the seller has any money that the sellers bank can see then they will want a contribution. It will blow a deal if they know that their are holding out. They don't have to approve the short sale. Your Realtor should negotiate as much as possible, but the listing agent is the one that will fight that fee and whether or not the seller can pay it. Good Luck!
0 votes
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