Homeowners seeking short sales to avoid foreclosure must obtain the servicer’s permission, as well as that of the mortgage insurer (MI), if the home was purchased with less than 20 percent down. MIs will consider short sales for purposes of loss mitigation and to help homeowners avoid foreclosure. They do not need to pay claims until a clear title is obtained through foreclosure, and a short sale requires them to waive certain coverage requirements. The MI will consider the homeowner’s financial situation; the property value and real estate commission in comparison to the purchase price; whether the home was purchased as a primary/second home or as an investment; and whether the short sale is requested due to default. If sellers are not experiencing severe financial hardship, the MI likely will require them to contribute cash or agree to an unsecured promissory note for repayment of a portion of the debt. | Read More