Monday, December 31, 2012
EVERYONE in Real Estate Needs a Marketing System
Real Estate Lending Trends for 2013
Sunday, December 30, 2012
MisInformation Regarding the Expiration of the Mortgage Debt Forgiveness Relief Act
Friday, December 28, 2012
Loan Modifications Statistics are Beginning to RISE!!
Wednesday, December 26, 2012
It Must Be Christmas, A Rare Example of theParties Working Together
Sunday, December 23, 2012
A Healthy Way to Enjoy the Tastes of Christmas
Thursday, December 20, 2012
Another SEO Opportunity for Business from Zintro!
Connecticut Introduces an Excellent Foreclosure Mediation Program
Connecticut lawmakers hope to help distressed homeowners deal with lenders who negotiate loan modifications while foreclosing at the same time. The state law makers are implementing a mandatory eight-month stay on foreclosure processes when homeowners enter mediation with a lender. “This is an effort to let the mediation process play itself out and give them space,” said state representative William Tong (D-Stamford). Tong is co-chair of the state legislature Banks Committee. This effort is designed to supplement the state’s groundbreaking foreclosure mediation program, which is run by the state judicial branch and is mandatory for homeowners facing foreclosure. State senator Bob Duff (D-Norwalk) believes that the 8-month stay is necessary because although “a lot of people were able to work things out within three months…there were some very difficult cases out there and those took longer”. The state has argued that this massive regulation is necessary because foreclosures are hurting home values too much in the state. I believe that this is an excellent response to a challenging problem, but I think that it needs to be implemented for reasons other than declining home values. It should be implemented due to the inherent unfairness of putting home owners through a lengthy loan modification process and later deny any relief after nine months to a year of cooperation by the distressed home owner.
Connecticut also recently attempted to cut MERS out of the equation in property transactions by passing a bill requiring foreclosing entities to register properties directly with town clerks or face fines. This also is a well though-out response to a difficult situation. Hopefully, more states will follow the lead of Connecticut. I also should comment that the many states require mediation or offer it to home owners in foreclosure.. the problem is that most state mediation plans place little leverage in lenders. Frequently, lenders do not even appear and the “representative” attending the mediation does not have authority – so what is the point?? Still, medication has been a very valuable tool. New York, and New Jersey have excellent medication programs and Florida has a very weak one. Paddy Deighan, J.D. Ph.D
Connecticut also recently attempted to cut MERS out of the equation in property transactions by passing a bill requiring foreclosing entities to register properties directly with town clerks or face fines. This also is a well though-out response to a difficult situation. Hopefully, more states will follow the lead of Connecticut. I also should comment that the many states require mediation or offer it to home owners in foreclosure.. the problem is that most state mediation plans place little leverage in lenders. Frequently, lenders do not even appear and the “representative” attending the mediation does not have authority – so what is the point?? Still, medication has been a very valuable tool. New York, and New Jersey have excellent medication programs and Florida has a very weak one. Paddy Deighan, J.D. Ph.D
Isn't This Behavior What Got the Real Estate Business into Trouble in the First place??
Those pesky little elves in Washington are at it again! I refer to them as elves because they tinker and meddle behind the scenes and no one really knows what they are doing! Of course I could refer to them as OTHER things but decorum and good taste prevent me from doing so in this forum…and besides, there are those that are equally delusional that will send me nasty emails!! LOL
In what could be a repeat of the easy-lending cycle that led to the housing crisis, the Justice Department has asked several banks to relax their mortgage underwriting standards and approve loans for minorities with poor credit as part of a new crackdown on alleged discrimination, according to court documents reviewed by Investors Business Daily. Eric Holder has no business in the mortgage industry…he is completely detached from reality and meddling in EVERYTHING! He is more dangerous than OBomshell!
Prosecutions have already generated more than $20 million in loan set-asides and other subsidies from banks that have settled out of court rather than battle the federal government and risk being branded racist. An additional 60 banks are under investigation, a DOJ spokeswoman says.
No Job, No Problem
Settlements include setting aside prime-rate mortgages for low-income blacks and Hispanics with blemished credit and even counting "public assistance" as valid income in mortgage applications.
In several cases, the government has ordered bank defendants to post in all their branches and marketing materials a notice informing minority customers that they cannot be turned down for credit because they receive public aid, such as unemployment benefits, welfare payments or food stamps.
Among other remedies: favorable interest rates and down-payment assistance for minority borrowers with weak credit.
For example, the government has ordered Midwest BankCentre to set aside almost $1 million in "special financing" for residents living in predominantly black areas of St. Louis. The program includes originating conventional home loans at fixed prime rates for African-American borrowers "who would ordinarily not qualify for such rates for reasons including the lack of required credit quality, income or down payment."
The same federal order, signed last month, praises Midwest for adopting "less stringent underwriting criteria" while under investigation.
In the case against Citizens Bank of Detroit, settled in May, the U.S. decrees that "the bank may choose to apply more flexible underwriting standards in connection with the programs under this order."
Such efforts risk recreating the government-imposed lax underwriting that led to the housing boom and bust, critics fear.
"It's absolutely outrageous after what we've just gone through," said former Rep. Ernest Istook, a Heritage Foundation fellow. "How can someone both be financially stable enough to merit a mortgage at the same time they're on public assistance? By definition, you don't have the kind of employment that can support such a loan."
In what could be a repeat of the easy-lending cycle that led to the housing crisis, the Justice Department has asked several banks to relax their mortgage underwriting standards and approve loans for minorities with poor credit as part of a new crackdown on alleged discrimination, according to court documents reviewed by Investors Business Daily. Eric Holder has no business in the mortgage industry…he is completely detached from reality and meddling in EVERYTHING! He is more dangerous than OBomshell!
Prosecutions have already generated more than $20 million in loan set-asides and other subsidies from banks that have settled out of court rather than battle the federal government and risk being branded racist. An additional 60 banks are under investigation, a DOJ spokeswoman says.
No Job, No Problem
Settlements include setting aside prime-rate mortgages for low-income blacks and Hispanics with blemished credit and even counting "public assistance" as valid income in mortgage applications.
In several cases, the government has ordered bank defendants to post in all their branches and marketing materials a notice informing minority customers that they cannot be turned down for credit because they receive public aid, such as unemployment benefits, welfare payments or food stamps.
Among other remedies: favorable interest rates and down-payment assistance for minority borrowers with weak credit.
For example, the government has ordered Midwest BankCentre to set aside almost $1 million in "special financing" for residents living in predominantly black areas of St. Louis. The program includes originating conventional home loans at fixed prime rates for African-American borrowers "who would ordinarily not qualify for such rates for reasons including the lack of required credit quality, income or down payment."
The same federal order, signed last month, praises Midwest for adopting "less stringent underwriting criteria" while under investigation.
In the case against Citizens Bank of Detroit, settled in May, the U.S. decrees that "the bank may choose to apply more flexible underwriting standards in connection with the programs under this order."
Such efforts risk recreating the government-imposed lax underwriting that led to the housing boom and bust, critics fear.
"It's absolutely outrageous after what we've just gone through," said former Rep. Ernest Istook, a Heritage Foundation fellow. "How can someone both be financially stable enough to merit a mortgage at the same time they're on public assistance? By definition, you don't have the kind of employment that can support such a loan."
Senate Considering Another Bailout...The FHA!!
Monday, December 17, 2012
Foreclosure Statistics Can Be Deceiving
Sunday, December 16, 2012
More on Bankruptcy and Short Sale Negotiation
Saturday, December 15, 2012
Bank of America Short Sale – Bankruptcy clarification, Part II
Clarification of a Bankruptcy – Short Sale Issue Part I
Wednesday, December 12, 2012
Wall Street Doin' It All Over Again
Monday, December 10, 2012
Feds Suing Bank of America over CountryWide Activity
Thursday, December 6, 2012
FHA Extends Anti Flipping Waiver Through 2014
Tuesday, December 4, 2012
New Fannie Mae and Freddie Mac Short Sale Guidelines
Sunday, December 2, 2012
Something Old is Something New Again..Deeds in Lieu are BACK!
Saturday, October 13, 2012
Fraud Continues to Plague Distressed Home Owners
Thursday, September 27, 2012
Further Discussion on Quiet Title
FINALLY!!! FHA Relaxed Condo Financing Rules
Good Old Discussion about HAFA
Tuesday, September 25, 2012
FINALLY, FHA Relaxes FHA Condo Financing Rules!!
Quiet Title: Separating fact from Fiction
Thursday, September 20, 2012
So What Exactly is All of this Talk About Quiet Title?
Wednesday, July 11, 2012
Monday, July 2, 2012
New Documents Intended to Simply and Clarify Settlement Procedures
Realty Trac Announces List of Best Short Sale Lenders
Friday, June 29, 2012
Is There Really a REO/Foreclosure Home Shortgage??
Some Additional Thoughts on Note Buying
Thursday, June 28, 2012
An Important Aspect of Note Buying
Wednesday, June 27, 2012
Fast Short Sale Approval?? Ask if the Servicer is Delegated
Tuesday, June 26, 2012
Call it What it Is…Quiet Title is Not as Advertised
Monday, May 28, 2012
Borrowers of Bank of America May Have Something to Smile About
Another Review of Non Judicial Foreclosure
Monday, April 30, 2012
Homeowners and Real Estate Agents Paying for Questionable Services
Homeowners and real estate agents are paying money for questionable services. Virtually every day I receive a solicitation for “forensic audits” “quiet title” actions (frequently performed by non-attorneys and this is unquestionably the “unauthorized practice of law” in all 50 states), “mortgage or note trail,” etc.
Many of these services provide a legitimate service and they actually produce the results that they promise. The problem is……how will this help a distressed homeowner or real estate agent?? Let’s suppose that an investigation is conducted into all phases of the distressed homeowner’s acquisition and loan of their property. We can further assume that the investigation reveals serious violations of the Truth in lending Act (TILA), Real Estate Settlement and Procedures Act (RESPA), the Home Ownership and Equity Protection Act (HOEPA), the Uniform Commercial Code (UCC) or various state laws.
So now what?? First of all, violations such as those stated above are not going to stop a foreclosure sale. They are valid and legitimate Affirmative Defenses or a Counter Claim to a foreclosure action. The point in all of this is that the investigative information provided by many of the firms that perform this type of service is 100% accurate and informative and 100% useless unless the homeowner is filing an Answer or Counter Claim to a foreclosure complaint or the homeowner is willing to file a separate cause of action against the lender. However, the mere filing of a separate lawsuit for such violations will not automatically stop the foreclosure or foreclosure sale process. The only action that automatically stops foreclosure is a bankruptcy petition. Accordingly, in order for a distressed homeowner to achieve value out of a forensic audit or other service indicated above, they must be willing to file a cause of action against the lender or include the alleged violations as part of an Affirmative Defense or Counter Claim.
Additionally, the distressed homeowner will have to have sufficient time prior to a foreclosure sale to utilize the information in a productive manner. If they do not have time (six months minimum – prior to sale), the filing of such actions is frequently useless. The distressed homeowner’s rights may not survive after the foreclosure sale as they may lose standing to maintain such an action since they are no longer the owner of the home.
Paddy Deighan, Esq
http://www.homesavers.pro
Sunday, March 4, 2012
Always Helps to Read the Fine Print
Always helps to read the fine print. This is especially true with government documents. For example, on a HUD-1, we typically read the second page first!! LOL I wanted to point something out that is frequently overlooked in HAFA (Home Affordable Foreclosure Alternative) programs.
The fine print in a HAFA transaction typically reads that if the lender rejects the HAFA short sale offer, the transaction AUTOMATICALLY converts to a Deed in Lieu (DIL)! For this reason, I have sellers execute a HAFA opt out form that is dated at the time of the purchase contract but not tendered unless or until I need it. The terms of a Deed in Lieu are typically not in the best interests of the seller and there will be no financial incentive to move or waiver of deficiency. The timing of the Deed in Lieu is also typically not conducive to a smooth transition for the home owner. It probably also goes without saying that there is no real estate commission paid either. The terms of the DIL are not specified but you can pretty much bet that they are not as favorable (or at least not as unfavorable) for the home owner.
HAFA has helped many home owners move on from a bad situation. For many, it is a tremendous program. However, for others, it has been a nightmare because of the Deed in Lieu. This situation also warrants great care in the submission on the short sale offer because you do not want to get the offer rejected (although a counter offer is fine).
As with many government programs, you have to be careful with proceeding under a HAFA program. The government required that lenders participate in the program but the lenders did manage to get certain concessions. The Deed in Lieu conversion on a rejected short sale in one such concession.
Paddy Deighan Esq
http://www.homesavers.pro
The fine print in a HAFA transaction typically reads that if the lender rejects the HAFA short sale offer, the transaction AUTOMATICALLY converts to a Deed in Lieu (DIL)! For this reason, I have sellers execute a HAFA opt out form that is dated at the time of the purchase contract but not tendered unless or until I need it. The terms of a Deed in Lieu are typically not in the best interests of the seller and there will be no financial incentive to move or waiver of deficiency. The timing of the Deed in Lieu is also typically not conducive to a smooth transition for the home owner. It probably also goes without saying that there is no real estate commission paid either. The terms of the DIL are not specified but you can pretty much bet that they are not as favorable (or at least not as unfavorable) for the home owner.
HAFA has helped many home owners move on from a bad situation. For many, it is a tremendous program. However, for others, it has been a nightmare because of the Deed in Lieu. This situation also warrants great care in the submission on the short sale offer because you do not want to get the offer rejected (although a counter offer is fine).
As with many government programs, you have to be careful with proceeding under a HAFA program. The government required that lenders participate in the program but the lenders did manage to get certain concessions. The Deed in Lieu conversion on a rejected short sale in one such concession.
Paddy Deighan Esq
http://www.homesavers.pro
Thursday, March 1, 2012
Time for a Review of Listing Agreements
Time for a Review of listing Agreements
Time for a review of listing agreements. It seems that no one every talks about them and that they are largely taken for granted. However, some recent developments have placed emphasis on them and we should discuss the issues that relate to them.
Listing agreements form the basis of a relationship between the home owner and a real estate agent. For years, they have contained substantially the same information. However, I have noticed a marked increase in the variance of the terms of such agreements as well as a tendency to forget certain aspects of them.
Recently, I have encountered listing agreements with TWO year terms. No one should want that. If the home has not sold in a reasonable period of time, the home owner will want to work with someone else. Similarly, if the agent is unable to get an offer, they may not want to work with the owner either because the disconnect will probably be over the home owner’s reluctance to lower the price. We all know that price is the issue. If priced appropriately, almost anything will sell.
Please make the term within reasonable industry guidelines. Six months is certainly acceptable, and 12 months seems too long to me.
I have also encountered provisions which enable the agent to capture a commission TWO years after an introduction of a potential buyer. This seems too long as most agreements call for 6-12 months as a “look back” period.
Additionally, I have noticed commission rates creeping up. Lately, I have noticed compensation percentages of 8-10%. The norm is 6% and many lenders are unwilling to pay even that in a short sale. Home owners will be very angry when they discover that the norm is 5% or 6% and you signed them to a higher fee. Sometimes the higher fee is justified…so state that in the agreement.
Finally, I want to illustrate and interesting aspect of Listing Agreements. In many jurisdictions, they are INSTANTLY binding. There is no attorney review; there is no three day right to rescind or cooling off period. This is unlike a sales contract. It is easier to terminate a sales contract than a listing agreement. I personally feel that there should be strong warnings on the agreement to the home owner about this. However, it would be prudent to explain this to the home owner since doing so make avert negative feelings in the future.
Paddy Deighan
http://www.homesavers.pro
Time for a review of listing agreements. It seems that no one every talks about them and that they are largely taken for granted. However, some recent developments have placed emphasis on them and we should discuss the issues that relate to them.
Listing agreements form the basis of a relationship between the home owner and a real estate agent. For years, they have contained substantially the same information. However, I have noticed a marked increase in the variance of the terms of such agreements as well as a tendency to forget certain aspects of them.
Recently, I have encountered listing agreements with TWO year terms. No one should want that. If the home has not sold in a reasonable period of time, the home owner will want to work with someone else. Similarly, if the agent is unable to get an offer, they may not want to work with the owner either because the disconnect will probably be over the home owner’s reluctance to lower the price. We all know that price is the issue. If priced appropriately, almost anything will sell.
Please make the term within reasonable industry guidelines. Six months is certainly acceptable, and 12 months seems too long to me.
I have also encountered provisions which enable the agent to capture a commission TWO years after an introduction of a potential buyer. This seems too long as most agreements call for 6-12 months as a “look back” period.
Additionally, I have noticed commission rates creeping up. Lately, I have noticed compensation percentages of 8-10%. The norm is 6% and many lenders are unwilling to pay even that in a short sale. Home owners will be very angry when they discover that the norm is 5% or 6% and you signed them to a higher fee. Sometimes the higher fee is justified…so state that in the agreement.
Finally, I want to illustrate and interesting aspect of Listing Agreements. In many jurisdictions, they are INSTANTLY binding. There is no attorney review; there is no three day right to rescind or cooling off period. This is unlike a sales contract. It is easier to terminate a sales contract than a listing agreement. I personally feel that there should be strong warnings on the agreement to the home owner about this. However, it would be prudent to explain this to the home owner since doing so make avert negative feelings in the future.
Paddy Deighan
http://www.homesavers.pro
Saturday, January 21, 2012
3rd Party Short Sale negotiations, Part III
3rd Party Short Sale negotiations, Part III. Today, I wanted to discuss the reasons in favor of utilizing in- house 3rd party negotiators. The first reason for an in-house negotiator is that the agent already has established a relationship with the seller and there is a high level of trust. The seller will be comfortable discussing finances with the agent. The agent will also be diligent in pursuit of the approval since they are a professional and their compensation will dependent upon a successful outcome.
Agents also have the experience and depth of knowledge to complete a successful approval. Keeping the negotiations in-house also simplifies the process since there is not another person or firm engaged in the process. This simplifies the process and avoids the all-to-frequent occurrence of “too many chefs in the kitchen”. I have been involved in many short sales during the last six months in which too many people get involved and call the lender and title. Title in particular will be disturbed by too many calls and people involved in the process. The situation was analogous to the telephone game that we played as a child. As the message was whispered from pupil to pupil, the message is completely distorted. The more individuals involved in the short sale negotiation (even if they are from the same firm, broker, etc.), the higher the possibility that some information may be distorted.
All in all, I do not believe that there is a definite answer to which method is best. There are great 3rd party negotiators and there are no so great negotiators. This is also true of agent negotiators too. So, there is no definitive answer. Even though there is no definitive answer, the issue is a very important one. The success (or failure) of a short sale negotiation is the single biggest issue in obtaining approval. Such an important decision must be made with great care.
Padraic Deighan
http://www.homesavers.pro
Agents also have the experience and depth of knowledge to complete a successful approval. Keeping the negotiations in-house also simplifies the process since there is not another person or firm engaged in the process. This simplifies the process and avoids the all-to-frequent occurrence of “too many chefs in the kitchen”. I have been involved in many short sales during the last six months in which too many people get involved and call the lender and title. Title in particular will be disturbed by too many calls and people involved in the process. The situation was analogous to the telephone game that we played as a child. As the message was whispered from pupil to pupil, the message is completely distorted. The more individuals involved in the short sale negotiation (even if they are from the same firm, broker, etc.), the higher the possibility that some information may be distorted.
All in all, I do not believe that there is a definite answer to which method is best. There are great 3rd party negotiators and there are no so great negotiators. This is also true of agent negotiators too. So, there is no definitive answer. Even though there is no definitive answer, the issue is a very important one. The success (or failure) of a short sale negotiation is the single biggest issue in obtaining approval. Such an important decision must be made with great care.
Padraic Deighan
http://www.homesavers.pro
Thursday, January 19, 2012
3rd party Negotiations in Short Sales, Part 2
Yesterday, I wrote about whether it is prudent to utilize a 3rd party negotiating firm or perform the services in-house. I presented two legal considerations for the utilization of a 3rd party negotiation firm. Today, I will discuss the practical reasons why it may be prudent to employ a 3td party negotiating firm.
According to NAR, the average short sale negotiation takes 27 hours to consummate. I maintain that this number is based on data that is now outdated. I believe that it takes at least 40 hours on average to complete a short sale. In any event, it takes a lot of time and effort to get a short sale approved (or denied). It is arguably not the best use of an agent’s time to negotiate the short sale. The time can be utilized in better business development or direct client services. The compensation is not commensurate with the amount of time spent (if there is additional compensation at all).
One of the other troublesome aspects of (listing) agents performing the short sale negotiations is that most buyers want the lowest approvable price. They are bidding on a short sale because they either truly love a particular home or they are shopping for the best price. It is in the agent’s financial best interest to obtain the highest approvable price because it will yield higher compensation for them and make the approval process easier for them. It is not difficult to get a short sale approved when the offer is close to fair market value.
A point can be made that the listing agent is in a difficult position with respect to their duty to their client. Their duty to the client in a short sale is to get the home approved and closed. The easiest way to ensure that this happens is to obtain the lowest approvable price because this will increase the likelihood of approval and close. It is a bit counter-intuitive that the best price may be the lowest price, but short sales are a different dynamic. This is especially true in the case of investor-buyers.
Tomorrow, I will present the considerations in favor of in-house negotiations.
Paddy Deighan
http://www.homesavers.pro
According to NAR, the average short sale negotiation takes 27 hours to consummate. I maintain that this number is based on data that is now outdated. I believe that it takes at least 40 hours on average to complete a short sale. In any event, it takes a lot of time and effort to get a short sale approved (or denied). It is arguably not the best use of an agent’s time to negotiate the short sale. The time can be utilized in better business development or direct client services. The compensation is not commensurate with the amount of time spent (if there is additional compensation at all).
One of the other troublesome aspects of (listing) agents performing the short sale negotiations is that most buyers want the lowest approvable price. They are bidding on a short sale because they either truly love a particular home or they are shopping for the best price. It is in the agent’s financial best interest to obtain the highest approvable price because it will yield higher compensation for them and make the approval process easier for them. It is not difficult to get a short sale approved when the offer is close to fair market value.
A point can be made that the listing agent is in a difficult position with respect to their duty to their client. Their duty to the client in a short sale is to get the home approved and closed. The easiest way to ensure that this happens is to obtain the lowest approvable price because this will increase the likelihood of approval and close. It is a bit counter-intuitive that the best price may be the lowest price, but short sales are a different dynamic. This is especially true in the case of investor-buyers.
Tomorrow, I will present the considerations in favor of in-house negotiations.
Paddy Deighan
http://www.homesavers.pro
3rd Party Short Sale Negotiation or In-House??
3rd Party Short Sale Negotiation or In-House?? This has certainly become a contemptuous issue…so much so that it is almost political!! LOL I participated in a blog discussion about this last week and the opinions were strong on both sides. Soooo, I thought that we could have a discussion on here to view each other’s opinions. I will present the pros and cons and hopefully others will comment so that we can have a discussion.
I personally feel that neither the listing agent nor buyer agent should negotiate the short sale. There are two legal reasons and two practical reasons for this. I will discuss the legal issues today and the practical issues tomorrow.
The first legal reason is that despite what many have heard, lenders prefer negotiations from a 3rd party. Think about this logically. Would you rather see an offer and negotiations (as a lender) from someone which has a vested interest in the outcome negotiate the sale, or a neutral third party. I work for lenders and I can tell you that they prefer the third party negotiations. I work with investors and home owners on foreclosure defense and my experience is that many third party firms are really good at this and utilizing them strips all emotion and appearance of impropriety from the transaction. Virtually all of the fraud that we have read about comes from too many people with too much financial interest in a property – all working together in a fraudulent manner.
The second legal reason is that negotiating a short sale is outside the scope of your real estate license. Few attorneys or regulators will argue with this. One of the reasons is that when licensure was established in all states, short sales were unheard of and not even considered. The issue was not part of the established guidelines. Perhaps this will change, but for now, it is outside the scope of your license.
One of the problems with this is that your Errors and Omissions policies can void coverage!! Virtually all such policies contain provision that enable a carrier to deny coverage. There are catch-all phrases such as complying with all laws, rules and regulations and if the carrier can illustrate that you acted outside of your licensure, you will be personally liable for the claim defense and any loss associated with it. This is happening today!! I am in Orlando on a foreclosure defense hearing for a client and I saw an ad on television last night that stated what I have said is coming for years…”did you lose your home in a foreclosure auction?? Did you have a real estate professional negotiate your short sale?? You may have a claim for damages.”
Also, realize that your broker will not be pleased either as he or she will be a named defendant as well. The irony is that their liability insurance coverage may protect them but you may have no coverage as discussed above.
Paddy Deighan
http://www.homesavers.pro
I personally feel that neither the listing agent nor buyer agent should negotiate the short sale. There are two legal reasons and two practical reasons for this. I will discuss the legal issues today and the practical issues tomorrow.
The first legal reason is that despite what many have heard, lenders prefer negotiations from a 3rd party. Think about this logically. Would you rather see an offer and negotiations (as a lender) from someone which has a vested interest in the outcome negotiate the sale, or a neutral third party. I work for lenders and I can tell you that they prefer the third party negotiations. I work with investors and home owners on foreclosure defense and my experience is that many third party firms are really good at this and utilizing them strips all emotion and appearance of impropriety from the transaction. Virtually all of the fraud that we have read about comes from too many people with too much financial interest in a property – all working together in a fraudulent manner.
The second legal reason is that negotiating a short sale is outside the scope of your real estate license. Few attorneys or regulators will argue with this. One of the reasons is that when licensure was established in all states, short sales were unheard of and not even considered. The issue was not part of the established guidelines. Perhaps this will change, but for now, it is outside the scope of your license.
One of the problems with this is that your Errors and Omissions policies can void coverage!! Virtually all such policies contain provision that enable a carrier to deny coverage. There are catch-all phrases such as complying with all laws, rules and regulations and if the carrier can illustrate that you acted outside of your licensure, you will be personally liable for the claim defense and any loss associated with it. This is happening today!! I am in Orlando on a foreclosure defense hearing for a client and I saw an ad on television last night that stated what I have said is coming for years…”did you lose your home in a foreclosure auction?? Did you have a real estate professional negotiate your short sale?? You may have a claim for damages.”
Also, realize that your broker will not be pleased either as he or she will be a named defendant as well. The irony is that their liability insurance coverage may protect them but you may have no coverage as discussed above.
Paddy Deighan
http://www.homesavers.pro
Subscribe to:
Posts (Atom)