Dec 16, 2010

Tip 48-2010: Short Sales & Mortgage Insurance

A recent trend with short sales is that the Seller’s mortgage insurance company may become part of the negotiations (The Seller may not even know they have mortgage insurance.)  As part of the short sale approval, the MI Company may demand a promissory note and/or a cash contribution in order to approve the short sale.
The good news for the Seller is that this contribution should result in the short sale lender and MI company agreeing to waive any deficiency.  The bad news is that someone has to pay the additional contribution.
If the Seller does not have the available funds for the contribution, then in order to obtain the approval, either the Purchaser and/or the realtors have to provide the additional contribution.
Each short sale is different, so this may not always be the case.  Nevertheless, it’s best to alert both the Seller and Buyer in a short sale transaction that the contract terms and cash required to close may need to change as the short sale negotiations proceed to an approval.
Please contact us if you have questions or need legal advice.

Senior Partner
William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, Virginia


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