Saturday, October 8, 2011

An Update on RESPA

I am compelled to write a blog about an admittedly boring but very important topic. RESPA has been a part of our world for decades but it is frequently misstated and misinterpreted. An example happened this week.

I became the attorney for a distressed homeowner and there is a variety of legal and practical issues. I contacted the listing agent who had the listing for all of an hour. She stated that she advised the client that he could not embark on an intended strategy because "it, violated RESPA". I asked her what aspect of the strategy violated RESPA. She replied that certain items could not be placed on the HUD-1. I asked where she heard this….."I took a two hour course" was the reply. Surely, the course did not specifically mention the strategy of this home owner and this was the agent's interpretation. I also noted on this agent's website that she is a Certified Distressed Property Expert although she admitted to me that she has done "very few” short sales. I understand that she took a two hour course and obtained this designation, but there is nothing like experience to become an expert in anything. An expert is not someone that has done “very few” of the expert area.

Well, to make a long story short, RESPA does not apply to this transaction and in fact, it does not apply to a number of transactions - especially today. RESPA has several exclusions to its applicability and does not apply to cash transactions as an example. In fact, you would not even need to utilize a HUD-1 in a non RESPA transaction (although practically speaking, this will be problematic).

The listing agent lost the listing to this home owner as a result. She caused extreme anxiety to the family because she indicated to them that they could go to jail!!!
Paddy Deighan

Everyone Must Stay in their Lanes in This Real Estate Market

I typically try and only write positive and useful blog entries. However the events of the past week have compelled me to blog and vent about some recent developments:

•an agent in New Jersey refused to relinquish a listing 45 minutes after it was signed and despite my directive to her (as the home owner's attorney) and the home owner himself, the agent listed the property in the MLS and is refusing to terminate the agreement. Worse still, is her buffoon broker threatened to place a lien on the property if the listing is not honored. The agent admitted that she had very little short sale experience and this is a complicated matter.
•another agent in New Jersey advised my clients that they should not file bankruptcy. The sought legal counsel and that attorney recommended that they file;
•an agent in California has refused to relinquish the short sale negotiation even after the home owner signed an agreement with a 3rd party firm. The agent is demanding an additional 1/2 percent for the short sale negotiation and she advised the client that the lender will pay it at close of escrow
•an agent in Florida advised my clients that they should not appear before a hearing officer in a foreclosure matter. Although I may have agreed with her, time was of the essence and she should not have advised the clients of this. It was the only option that we had but her advice severely upset the clients and she should not have commented on this,,,,

As the market becomes more challenging, there will be more bizarre occurrences. However, if everyone works together and stays in their lanes, more transactions will successfully close escrow. All of the above occured THIS week!!! It takes so much additional time for me to handle these matters because time is wasted on non productive matters.

Paddy Deighan