Warning: Countrywide & PMI Short Sales

Watch out if you are working a Countrywide short sale with PMI!  There is some funny stuff going on…  I’ve been working a Destin FL Countrywide short since October 2007, with a Countrywide second on it.  There have been the usual delays, appraisals, counteroffers, request for seller’s medical receipts, then a denial in early December. About a week later, the buyer re-wrote his offer to the terms Countrywide wanted.  Yesterday, after more delays with “re-opening the file”, ordering new appraisals, etc. I was informed by the negotiator that the second mortgage had been “released” to the AIG United Guaranty, the PMI company.  She said Countrywide would not give an approval until they knew what the PMI company wanted, as their policy has changed and they no longer negotiate with PMI companies.  She said that was now my job, and gave me his contact information, with a warning that PMI would be very difficult to get good terms from.  I asked her when the loan was sold.  She “fumbled” through papers and said she could not tell.

I called AIG and they were right on top of it.  They said the loan was bought on NOVEMBER 5- a few weeks after the short sale offer was submitted!  The AIG rep did not seem pleased there had been a short sale in the works.  He said they should have been told when they bought the loan, and that “Countrywide dropped the ball”.  I wonder if they told him the property also had a foreclosure sale date set at the time?

I have two big problems with this.  One, is that Countrywide did not disclose pertinent and known information to me.  I worked over two months on their good word for approval, when they tell me it will all be moot depending on what AIG says.  Why didn’t they tell me this on November 5?  Second, they did not disclose to the PMI company about the status of the loan.  I have spoken to a local attorney who said there seem to be RESPA violations going on. He said there is a Florida doctrine “Holder in due course” which requires notification to a loan purchaser about anything affecting the loan prior to sale.  He said when that is the case, the second mortgage purchaser has legal defenses which allow them to hold the loan free and clear of all defenses a borrower may have against the original note holder.  He and my seller will go forward pursuing this if I run into a stone wall with these new negotiations.  I asked the Countrywide loss mitigation department if I could switch negotiators, as it is quite apparent I have been misled.  They said no.