Q: In cases where Fannie and Freddie loans involve PCS orders and where deficiencies on a short sale are forgiven without requiring the borrowers to execute a promissory note for the deficiencies, what happens if the private mortgage insurer requires a promissory note to approve the short sale? Are private mortgage insurers allowed to ask for that note, despite the GSE rule?
A: To date, the following mortgage insurance companies have executed agreements with Fannie Mae and Freddie Mac that allow servicers to make decisions about short sales and borrower contributions in accordance with GSE policies without obtaining the approval of the mortgage insurer: CMG Mortgage Insurance Company, Essent Guaranty, Genworth, MGIC, Republic Mortgage Insurance Company, Radian Guaranty, PMI, Triad, and United Guaranty. These companies will not pursue a separate action to recover any deficiency. For mortgage insurance companies not listed, the servicer must obtain their approval on a case-by-case basis, and it is up to the mortgage insurance company to determine whether the situation warrants a contribution (or whether the company will waive it).