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Understanding the Relationship Between Texas Short Sales and Mortgage Insurance (MI)

(Both the video and article offer distinct perspectives and information. Be sure to check out both for a comprehensive understanding. The video provides visual clarity, while the article delves into specific details. Together, they provide valuable insights to help you navigate your situation effectively.)

In Texas, where foreclosures can result in deficiency judgments holding you liable for the remaining loan balance after the sale, understanding how MI impacts short sales becomes even more critical. Here's a breakdown of the pros, cons, and what to expect from your lender:

Can MI Help Avoid Foreclosure in Texas?

MI can potentially be a double-edged sword in a Texas short sale. Here's why:


  • Foreclosure Prevention: If your MI policy covers deficiencies in short sales (check your policy details!), it can prevent foreclosure by covering the difference between the loan amount and the short sale price. This saves you from the severe credit score damage and future loan restrictions associated with foreclosure.


  • Navigating the approval process for a short sale with mortgage insurance (MI) companies can be intricate and lengthy. During this process, you may encounter various challenges:

  1. Negotiating Selling Price: MI companies may advocate for a higher selling price to mitigate their losses, potentially causing delays in finalizing the sale.

  2. Requesting Contribution: There's a possibility that they may request you to contribute funds towards covering the deficiency.

  3. Policy Exclusions: It's important to note that certain Texas MI policies might explicitly exclude short sales, leaving you solely responsible for the entire deficiency.

What to Expect from Your Texas Lender:

  • Short Sale Review: Your lender will assess your financial situation and property value to determine if a short sale is the best course of action.

  • Negotiation: They will negotiate the minimum acceptable selling price that covers the loan amount, minus any applicable fees.

  • MI Communication: The lender will work with the MI company to get approval for the short sale terms. This communication can add time to the process.

  • Sale Finalization: Once approved, the lender will finalize the sale with the buyer and ensure you receive any remaining proceeds after the loan is paid off (if any).

While MI can be a valuable tool in avoiding foreclosure, it adds complexity to the short sale process in Texas. Be prepared for potential delays due to approvals and negotiations.

Additional Tips:

  1. Review Loan Documents: Take the time to carefully examine your loan documents or reach out to your lender for clarity on the specific terms of your Texas mortgage insurance (MI) policy regarding short sales. Understanding these terms can help you navigate the process more effectively.

  2. Consult a Housing Counselor: Consider seeking guidance from a HUD-approved housing counselor who can provide free assistance on navigating short sales and dealing with MI companies in Texas. You can find a counselor near you by visiting

  3. Expert Assistance: As a seasoned real estate professional specializing in short sales and foreclosures, I offer my expertise to help you navigate this challenging aspect of real estate. With my knowledge and experience, I am dedicated to assisting you in understanding the intricacies of the process and achieving a successful outcome. Feel free to reach out to me for personalized guidance and support throughout your short sale journey.

  4. For a more detailed look at short sales, please see my article: Short Sale vs. Foreclosure: Financial Hardship in Texas, AND Is a Texas Short Sale the Best Option for Divorcees Struggling with Mortgage Payments?

Remember, navigating short sales and MI in Texas requires careful planning and expert advice. Consulting a housing counselor and fully understanding your MI policy are crucial steps towards a successful short sale.

"A short sale may or may not be the answer for you, but I'm here to help you explore your options. Let's chat it out or feel free to send me an email or text, and we'll find the best solution for your unique situation." A.Allen

Amanda Allen, Realtor


(903) 603-0648


Hi, thanks for stopping by!

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