Miami has had more that it’s share of short sales and foreclosures… and as a result, banks have had plenty of practice. Bottom line? The process is getting smoother but there are some new twists that buyers and sellers should be aware of. Hiccups seem to be the name of the game.
This is the newest hurdle I’ve come across:
A (MAJOR!) lending institution SET THE SHORT SALE PRICE ON A PROPERTY I HAD LISTED … asking me to slash the amount I HAD LISTED IT FOR (by 1/3 … to sell it quickly).
Withing days, I had a full price buyer onboard (of course I did, at the bank’s ‘give-away-price’!) And the process began. The bank accepted the terms of the sale… after their tedious and requisite searches, appraisals and other mountains to climb.
As we neared ‘closing’… the bank added a ‘hurdle’: Because the original loan was covered under PMI insurance, PMI would have to review the file, and would have the FINAL say.
PMI asked the seller to pay the insurance company an amount equal to 1/4 of the sales price (that had been SET by the bank )… In other words the seller was going to have to pay (interest free) installments to PMI… monthly… for the next 20 years.
Catch 22… To close a SHORT SALE, all parties (PMI, SELLER AND LENDER) must come to a ‘meeting of the minds’. Without that, there is no closing. If the seller “walks”, and the property goes into foreclosure, PMI can file suit against the property owner to recover their losses.
EVEN IF THE BANK DETERMINES THE PRICE FOR A SHORT SALE, THE SELLER CAN BE REQUIRED TO REIMBURSE THE PMI INSURER FOR A PORTION OF THE PMI’s LOSSES!
Short sales are certainly faster than they were even a few short months back, but the term “short” still does not refer to timeframe. Questions, please ask .