Real Estate Blog - AGENTS MAY BE IN VIOLATION OF THE LAW WHEN MANAGING SHORT SALES OR MORTGAGE MODIFICATION

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AGENTS MAY BE IN VIOLATION OF THE LAW WHEN MANAGING SHORT SALES OR MORTGAGE MODIFICATION - "Let's all be careful out there."

BE CAREFUL WHAT YOU SAY. It could cost you your license.

* * * * HARD CORE REAL ESTATE TALK * * * *

IF YOU ENGAGE IN LOSS MITIGATION CONSULTING, FORECLOSURE PREVENTION, MORTGAGE LOAN MODIFICATION. . . . . .

Be afraid. . . Be very afraid.

THINKING OF OFFERING SERVICES AS A "MORTGAGE MODIFICATION EXPERT"?. If you, as a Real Estate Broker, Real Estate Agent of a Real Estate Broker or Real Estate Salesperson, engage in any of the following in connection with a real estate listing or sale, you may be in violation of the law in some states and most certainly are in Maryland. In Maryland, if one offers the services below, they are required to be licensed by the Commissioner of Financial Regulation, CFR.

RISK #1. Advising home owners in connection with a mortgage loan modification, which would include the possibility of deferral of payment on a consumer' s mortgage loan, unless you are specifically licensed to do so.
RISK #2. Accepting an up-front fee in connection with offering mortgage modification advice.
RISK #3. Offering credit repair services.
RISK #4. Offering credit repair or mortgage modification services without a written contract.

WHAT IS A FORECLOSURE CONSULTANT? Any person who contacts a home owner who is at least sixty days in default, is likely to be deemed a "FORECLOSURE CONSULTANT". The home owners need not be in foreclosure for a person providing financial advice to be considered a FINANCIAL CONSULTANT.

If a licensee (real estate) solicits a homeowner in writing, in person, by phone, e-mail, postal mail and offers the following services, they are acting as a FORECLOSURE CONSULTANT:

Stopping or postponing a foreclosure sale. See article about.
Obtaining forbearance from any trustee or mortgagee
Assisting a home owner with reinstatement or or refinancing

FORECLOSURE CONSULTANTS are prohibited from the following:

Claiming, demanding, charging, collecting or receiving any compensation until after the foreclosure consultant has fully performed the services for which they were contracted to perform.
Receiving compensation in connection with foreclosure consulting unless the fee is fully disclosed in writing, is clearly listed on any settlement documents.
Receiving REAL ESTATE BROKERAGE FEES in excess of 8% of the sales price.
Receiving any money to be held in escrow on on a contingent basis on behalf of the homeowner.
Assisting a home owner in obtaining any extensions, reinstatement, waivers or defaults, obtaining loans or advance of funds.
Saving the homeowner's residence from foreclosure.
Purchasing or obtaining an option on the residence under certain conditions.
Arranging for the home owner to become a renter or otherwise continue to reside in the residence.

A MORTGAGE CONSULTANT systematically contacts owners of RESIDENCES in default to offer FORECLOSURE CONSULTING SERVICES.

THERE'S MORE. At a later date, I may expand on the risks to real estate brokers and agents. There's a lot more risk involved for real estate agents who attempt to expand their businesses by offering services other than real estate brokerage, meaning * * * * LISTING AND SELLING REAL ESTATE.

THE WINDS OF CHANGE ARE COMING YOUR WAY. The above applies specifically to the State of Maryland. However, all states Attorneys General, Real Estate Commissions and legislatures are looking at these matters and either promulgating new laws to protect consumers or discussing actions. HUD has a study ongoing which, if what I'm hearing is correct, will be far more DRACONIAN than the laws now on the books in Maryland. Cash

DON'T RISK YOUR REAL ESTATE LICENSE FOR A FEW $$$$. It behooves all real estate brokers and agents to be cognizant of their words and deeds in connection with home owners in distress in connection with the mortgage mess which has now expanded into a serious economic recession and a housing depression.

"Let's all be careful out there."

Agent with Blinders

Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988.

Posted by Lenn Harley, Real Estate Broker, Maryland & Virginia on 08/21/2009 03:01 PM

Comments (94)

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94 Comments on AGENTS MAY BE IN VIOLATION OF THE LAW WHEN MANAGING SHORT SALES OR MORTGAGE MODIFICATION - "Let's all be careful out there."

AUG

Oh Lenn...

With all of the hue and cry it's easy to forget that we are real estate agents and brokers! We all want to help but its important not to overstep our boundaries.

Richard. Indeed. I attended a brokers meeting with our MLS, some attorneys, a representative for the Commissioner of Financial Regulation and some other folks yesterday. This post is a synopsis of some of the highlights of the meeting.

Featured @ Club Chaos

Lenn - Thankfully, I haven't had any interest in perfoming any of these particular functions myself, despite the temptation to make a few extra bucks. The quote in your title reminds me of Hill Street Blues, but I'm guessing that was intentional. I haven't thought of that show in years.

Jason. As a confessed TV junkie, I remember all of the great old shows. Yep, Hill Street Blues it is.

Actually, with the risk facing agents and brokers, it fits our folks too.

C. Thanks. Love it.

Lenn --- this post should be a feature --- I'm going to flag it for a feature. And, I'm going to re-blog it. You are so right --- as a broker-n-charge, I am terrified about my agents doing this kind of stuff and then we all get in trouble. Have been away for a few days due to a "set-back", but am back and I really do like your new photo.

Your post makes me think about my "Real Estate Mess from Hell"

Mama Liz's Signature

Liz. Thanks for the ReBlog. Super synergy. I'll read your "Mess" post.

Hi Lenn - Florida has anti-fraud laws as well, regarding foreclosure rescue. Be careful, definitely!

Wendy. Very interesting. Florida is one of the states where I thought I'd get a lot of different thoughts.

Lenn - One side benefit to the housing crisis, the collapse of Wall St. firms, and the lawsuits that are sure to arise from short sale "advice," is that law firms will have work for decades. If we can just convince the barristers to buy new homes with all the money they'll be making, the housing market will recover in short order.

John. And we'll be ready to help them buy.

Everyone scrambling to make a living is one srue way to make these mistakes. I'll stick to Real Estate and leave the rest alone.

Charles. Me too. I am the most risk averse real estate broker you'd ever want to know.

Lenn,

I am sure many agents and brokers are thanking you right now. I would think with most states that would apply. We are told in Utah Never, Never give legal advice. I agree with Charles incharge, in this market we can find ourselves on a slippery slope.

Debbie Aldrich

Debbie. Thanks. I'm getting some feedback by e-mail that other states have similar retrictions on what an agent can do.

Definitely things to be aware of. So many of us want to help people in trouble and yet we have to be aware of the consequences.

Christine. That's what I hear from a lot of agents. We want to help. Unfortunately, the ones who just want to help, may not have sufficient knowledge to do so.

Thanks for the continued HARD CORE REAL ESTATE TALK!!

Lenn. I wonder what's involved in getting the required licensing in MA? Pay a fee? Back ground check? I bet it's not difficult. I bet it doesn't require any education specific to "foreclosure consulting".

I don't see any thing in your article that would prohibit Short Sales.

"promulgating new laws to protect consumers" and in the same stroke taking away their rights and making it where they will need to hire attorneys who will of course charge outrageaous upfront fees that will keep most homeowners from seeking help.

The FEDS need to be focusing their time and efforts on coming up with a uniform procedure for short sales. Short sales are the salvation of this current real estate market.

Short sales are the one procedure that not only moves inventory but saves the lenders/investors and MI companies money and salvages some of the consumers credit so they can become consumers again in the near future.

Lenn - Everything you say is true. It's one of the reasons I have yet to list a short sale.

Lenn - Thanks for the heads up and there are quite a few agents around Vegas doing this type of stuff!

Those calls annoy me... all of the people that want me to "help" my clients. I'm not an expert at that, so I refuse to try to pass myself off as one...

Lenn- Here in Florida we had new laws a long time before Maryland or Washington state ( who has one of the most stupid laws I ever heard of in regards to short sales). Washington state not Maryland that is.

Our new laws came into effect last October. We are ground zero so it makes sense that the scammers would be addressed early on. They are arresting people here in groves!

Realtors, attorneys and mortgage brokers are exempt from the laws. As long as we are licensed agents we can perform most of the activities in your post. Do I want to? Of course not.

I don't do loan mods. We don't do refi's. We do short sales and we have attorneys we tell our clients to hire to do foreclosure defense. Katerina

Now IF we could just get them off the airways. I am so, so sick of hearing them.

Hurting people will call these people and end up in a worse condition.

Lenn, I noticed a few short sales that closed, then were relisted within a month of having been purchased by investors (company name as buyer). I wondered about the Realtor doing the initial sale to an investor, then turning around and relisting it for the investor...gave me a verry uneasy feeling. Couldn't a seller, if they were stuck with paying a partial sum back at closing, go after the listing agent for shorting their short? Probably a naive question, but we don't list them, so perhaps I'm paranoid. Very dangerous territory without a full grip on the laws of one's given state. Never mind federal laws...

Lenn,

I enjoyed this post very much. The good realtors need to be ever vigilant in our actions so as to not be confused with the modification/cure your foreclosure folks.

We do not go anywhere near that stuff. But... there are many out there and I am hopeful that not too much will spill over to the good work that Realtors do for their clients.

It sounds from your review that this panel was more focused on the new "savior" business.

Evening Lenn, As usual, extremely well written and insightful. Lets hope agents will not stray over that line while trying to be helpful !

Maybe I am just an A-Hole but I have no desire to do short sales under the guise of helping someone out.

So many agents are going to be sued in the future. I am trying to stay off the litigation train

Right on Lenn. Real estate is enough to keep up with.

As always great advice try to do something well and not be mediocre about a number of things. Not even to mention violating the law.

I believe we should be willing to help in good times and bad but the liability is daunting, and I hate the fact that we are facilitating banks to call the shots in real estate transactions.

Lenn,

I feel isolated in a way.

We just don't have that type of a market in Toronto.

It slowed but never tanked.

Brian

Hi Lenn -- Enough to scare me. I don't deal with this subset and I'm glad for it.

Lenn,

Your post could not have come to us at a better time.

I used to handle loss mit for a national lender. Many of my past due borrowers were actually given bad advise from good hearted Realtors who were just trying to help.

We can caution our clients to BEWARE of the loan mod companies out their who are collecting up front fees and not delivering the desired result.

As a Loan Officer, I'm allowed to counsel a client regarding their mortgage situation, good & bad.

As a Realtor, you can still warn clients of shady companies who make their living off application fees and never do a thing to truly help the client.

Melissa Kulikoff

Melissa@mkulikoff.com

Lenn,

Sounds like it's time for the Real Estate Commission to make an example of someone to slow down the practice. It won't be me.

Rich

Lenn Good Evening

Without a doubt this blog is very informative, I talked about something similar myself some time ago and I suggested to prior to begin performing this services to check with the department of real estate of your estate for local law enforcement.

In California, if the homeowner hasn't been filed a Notice of Default, a broker or a real estate license can charge an upfront fee to the homeowner in order to assist him with the workout.

There are some regulations to follow, like disclose how much is going to be charge and what services are going to be performed, then you submit the letter to the DRE to obtain approval.

If the home owner has been filed a Notice of Default then, you can not charge any upfront fee until the negotiation is completed.

Check this link of better explanation of what I'm talking about and again. check with your local DRE department before entering in this type of transactions.

Best Regards

http://www.dre.ca.gov/cons_adv_fees_alert.html

Great post! In Georgia advising someone to do a short sale, you better be a lawyer! There have been a few several succesful prosecutions because there are so many implications that were overlooked - tax, legal, financial etc.

Hi Lenn

An outstanding post and great information.

Good luck and success.

Lou Ludwig

All good points -- we went to a similar seminar today with lawyers and brokers, etc and pretty much the same message.

One must remember not to proaction outside of our profession. Great information here.

AUG

Lenn:

Very informative and on target post!! There are tons of these "consultants" and "specialists" here in Texas, and most of them don't have licenses. They put these signs on the corners in neigborhoods offering their services and then they prey on homeowners at their most vulnerable time. They are over the line but there doesn't seem to be anyone to stop them.

Lenn, Recently I got the CDPE designation. Am I going to do ANY short sales? ABSOLUTELY NOT!!!!

I wanted to be knowledgeable...and I know it is the best way to lose your license. Thanks for the great post.

Brian. I don't know about MA. I'm in MD and VA. The training I got Thursday was for MD Brokers and Office Managers. Licensing under the Maryland Credit Services Business Act and the Protection of Homewoners in Foreclosure Act is what it is and a license as a Real Estate Salesperson or Real Estate Broker doesn't work to offer these services.

I'm not convinced that short sales are the only answer because, while it's definitely preferable to foreclosure, the home owner still loses their home. If short sales are the only answer, they need to be completed in a "shorter" time frame and with more honesty on the part of the lender.

I believe that there is a place for mortgage modification. What the MD legislature is trying to do is control the cottage industry of mortgage modification scams. What my Realtor Association is trying to do is prevent agents from getting involved mortgage modification as a sideline to real estate brokerage practices.

The reason I wrote this is to encourage agents and brokers to avoid getting into trouble by thinking that they can easily incorporate mortgage modification, etc. into their daily practice as a profit center with only a real estate license. They cannot in MD.

IMO, mortgage modification. as offered by the lenders. is not very much help. All it does is delay the inevitable short sale or foreclosure. Reduction of the mortgage principle balance is the long term answer and that isn't even on the horizon.

Reduction of the mortgage balances for American home owners would have been a good use of TARP and that promise lasted about a week, just long enough to get about $430Billion into the hot hands of the banks, at which time the focus quickly changed to permit the banks to simply capitalize the $Billions to their balance sheet.

Christianne. Nothing wrong with listing short sales. We need good agents to perform this service for home owners who can't keep their homes.

Robert. I hope the NV license law permits it.

Lane. Good thinking.

Katerina. I just read part of the Florida law last evening. Wendy sent it to me. Yes, Florida is on the front line in these matters. Real estate agents and brokers in MD are not exempt and would have to have a additional license to offer mortgage modification under most circumstances.

Missy. That is so true. The consumer didn't know what they were getting in their mortgage and now they don't know what they're getting with mortgage modification.

Laurie. BINGO! A real estate agent and their broker, representing a short sale owner/seller who gives advice about signing a note for a post settlement deficiency balance is probably violating the law in MD. That would be covered under the Credit Services Business Act because the new note is new credit.

Cathy. My Association of Realtors recognized that many agents are advertising services for the "savior businesses" and wants to get warnings out.

Bill. Indeed. The old excuse of "I was just trying to help. . . " will not be a defense.

Ross. You may be saving yourself a lot of angst.

Russ. Me too.

Candice. Isn't that the truth.

Terry. True. Real estate sales is complicated enough.

Sherri. Nothing wrong with helping is you know what you're doing and are acting within a license law.

Brian. Poor thing. You're missing an adventure.

Chris. Neither do I. Good for you.

Melissa. Warning consumers of the mortgage mit. scams is helpful. That's about as far as we can go.

Richard. All it would take is one complaint. Based on my meeting Thursday, they already are investigating a number of complaints and the MCSBA has many more.

Carlos. Thanks. That's good info for CA licensees.

Jim. HA. From what I'm reading, foreclosure in GA takes minutes, not months as it does in most areas.

Lou. Thanks.

Bob and Carolin. I suspect that most states are putting the warnings out to agents and brokers.

Roland. Good advice.

Carol. Sad, although from what I've read, TX wasn't hit with the foreclosures that many states were.

Marcia. Someone has to represent sellers in short sales. Better trained agents than someone just throwing stuff up to see what sticks or going along with the sale to collect a fee.

Lenn. thank you for this very timely post. We would do well to keep this in mind when we enter the world of short sales and loan modifications. We have to remember as real estate agents we are licensed to sell houses and negotiate with buyers and sellers, but we are not licensed to negotiate with the banks on our client's behalf.

I know of at least one real estate attorney and a former loan officer here in Montgomery Co. who are doing loan modifications for their clients and are charging them an upfront fee. I assume they are licensed to do loan modifications (they indicate they are). Is it legal for them to charge the upfront fee if they are licensed to do the loan mod?

Dan

Lenn - I'll have to do a bit of research into the matter, but I am certain that you are describing a similar process here in CT, and no one that I know of is even attempting such a scheme up here (I hope). I know I have never even thought of it, nor would I - it's out of my sphere of expertise.

Oh, btw, you said: "Reduction of the mortgage principle balance is the long term answer and that isn't even on the horizon" -How true, and the banks are so stupid not to realize that they would actually save themselves more money in the long run by doing so than to accept short sales and pursue foreclosure filings...

If you don't write a blog post about this, then I will....

People, listen to Lenn. Your brokers will thank you.

Yes,you are correct Lenn. Georgia is a "Non judicial foreclosure state." A home could be foreclosed upon in a few months. Notification, posting in the paper, and eviction.

Lenn - We have a couple of great attorneys with whom we work: one focuses on bankruptcies, the other on negotiating short sales and handling our foreclosure sales. For our clients facing these quagmires, our best advice is to talk to them. Our job is to market and sell their properties, not give complicated financial counseling.

Thank you Lenn,

I am a new licensee and have not yet affliated with a broker. I can't imagine any licensee doing the things you stated, but A slip of the tongue or just a desire to help could be a costly mistake that they wouldn't forget.

Thanks again for sharing and caring enough to post this advice!

I have my hands full listing short sales. I have enough work and probably too much just to do that right. I hear your words and after 20 years without being in a law suit I want to keep it that way. I am also a great believer in our Code if Ethics, so I do not want to attempt to do what I am not qualified to do.

Thank you Lenn for this post and warning, I try not to overstep my boundaries. It is a great reminder for agents,

Lenn, Thank you so much for the great information. Sometimes in our zest to help we get carried away, it's very important that we do not overstep our bounds. This is one I want to reblog. Barbara

Lenn, good warning to not take lightly. Thanks for the post.

Lenn,

Good advice and great blog!

Lawyers spoke at out office meeting Thursday to say essentially the same thing. In CA licensed RE agents should not offer advice (or try to interpret) to clients about bank addendums. These lengthy addendums try to skirt the CAR requirements for a sale of real property. Clients should be advised to consult a lawyer and professional tax advisor about the consequences of accepting a bank addendum in a distressed (NOD,Short Sale, REO) transaction.

The liability is primarly why I shy away from the short sales. I am a licensed salesperson therefore I am trained to focused on the sale. I am not here to "help" people although I am very customer service oriented (make sense?)

In the foreclosure prevention arena, I am just a resource. What that means is that I have interviewed MANY MANY MANY attorneys and even gone in to see their "operations" and try to experience it from a CONSUMER perspective. I have a list of three solid attorneys or firms who SPECIALIZE in counseling consumers so that consumers can ultimately make the choice on what THEIR best option is. Odds are (it boils down to 3 choices) I only have a 33.3% chance on getting the listing. The lawyer is retained once Joe Consumer makes a decision, I list and sell if that is Joe Consumer's decision. I haven't promised a darn thing. I don't negotiate a darn thing. The lawyer does.

When we rise out of the ashes there are going to be a ton of consumers who feel like they are wronged (they are already blaming everyone else for their actions!) Who is to say that that same consumer who is blaming the agent that sold them the house, LO that mortgaged the house, Appraiser that appraised the house (the beat marches on) ISN'T going to blame the short sale agent or loan modification expert that promised them an EXIT from their woes.

This is a slippery slope and we need to CY(O)A.

Lenn, I frankly do not know enough about the process to give anyone advice. I have seen agents in my market attempting to wear whatever hat addresses the current hot button.

Long ago I realized you do not lose face with a client to refer them to someone more qualified. You cannot be one stop shopping.

I offer some credit counseling for free to any buyer who is anticipating purchasing a home. My counsel is limited to check your scores and all 3 reports. Have removed any inaccurate information. It is unwise to make any large purchases on credit or apply for any new credit until after you close. I never tell them I can get their scores up nor do I offer to help them remove any negative credit.

I always recommend that they speak with a mortgage expert if they are not sure how a negative item will impact them.

Thanks for reminding us how much trouble we could get into.

Lenn, thanks for bringing such important info for agents. . All brokers better be warned, specially in Maryland that the State is looking out for it's residents. . I'm doing a short sale for a client right now that she paid $4500 to a company that was shut down by the FBI.. .she will never get her money back.. .and the worst. .a real estate agent from a big name real estate Co. was involved in the scheme.

I'm not aware of Washington having "Laws" specifically pertaining to short sales. We have a "Distressed Property" Law.

While it is true that every agent experiences risks regardless of the type of business model they seek, it is not an unmanageable risk or one that should be construed as too dangerous to pursue.

Fear of the unknown often fosters an unwillingness to engage in new practices and that fear has caused some difficulty here in Washington State. However, while other Brokers were paranoid about our new "Distressed Property Law", our firm was fully engaged all be it under a new set of guidelines. Education is the key. Education about YOUR States laws.

I'll write a post just to clarify any confusion. I hope this doesn't violate any forum guidelines...Let me know if it does Lenn, thanks..

Washington State's "Distressed Property Law". Have No Fear. Go about your business...

Gene

Great read Lenn. I don't want any part of any of it at all so Im in the clear. I will keep my activity's to what I know as everyone should.

Lenn,

I do mailings to folks who are delinquent on their mortgages. That letter was reviewed every which way by my broker's legal staff - to ensure I wasn't even close to crossing the lines you discuss. I offer real estate services if they choose to go that route - and suggest that get both legal and financial professions to help guide their decisions. Thanks for reminding us all we do need to proceed with caution!

I am a realtor out in Santa Clarita California where short sale make up the large majority of our market. Not only have I attended training seminars but I have successfully completed many short sales as both a listing and buyers agent and feel comfortable calling myself an "expert" in that area and am viewed as such by my co-workers. Successfully completing a short sale should ALWAYS include negotiating with the lender so that your seller client is released of their debt so that they will not have deficiency judgments against them in the near future. This is is probably the most important item that will prevent you from getting sued by your former clients. Sometimes they may need to pay a little money to the lender or you can get the buyer to do that as part of the sale. If that is not possible then you must inform them of that in writing. Our clients want honesty, pure and simple and they deserve that. I have met realtors who have sold out their seller clients by not informing them that they are still on the hook for the mortgage balance, their excuse is that the client"should have gone to a lawyer". I always advise my clients to go to a lawyer and accountant but it is common logic that if you call yourself an expert the client assumes that you will explain the consequences of the documents that you are asking them to sign. Short sales are difficult, if you don't know how to do them then refer them to a co-worker who does. Doing whats right will keep you out of trouble 99% of the time.

Lenn,

You always have such words of wisdom! You are so right on this one. If we just stick to the buying and selling of real estate we should be fine. Still we are predisposed to be helpful; not easy to walk away, but sometimes you have to.

Lenn, I think more agents should stick to the job of selling real estate. Our career is hard enough to master without trying to do everything else. Thanks for raising the awareness.

Jayne. I have reports from the state of many complaints against agents. Best we stick to our license.

Lauren. In Maryland, if the agent negotiates on behalf of the with the lender about a note, second trust or deficiency, they have stepped over the line. It's considered advice about credit and that requires a license.

Irene. Soliciting owners in default more than 60 days offering anything but real estate services is risky in MD.

Laura. Me too, real estate brokerage.

Gene. I'll look for it.

Barbara. Thanks. Reblog is enabled.

Boy I'm in total agreement with you. In fact I to submitted a post about LM's just a short time ago because I came very close to jumping into that whole quagmire earlier this year with a RE Broker/Attorney friend of mine who's been practicing RE Law for 25 years and specializing in Short Sales, Foreclosures and BK's during much of his career.

After carefully researching and even dipping our wands into the honey dew just a tad by actually taking on a couple of LM's we realized that this is really forebidden territory and that the jury is still out on the long term ramifications and reproductions of this whole cottage industry.

If you didn't already see it please take a moment to peruse the link below and if you are intending to do another post on this subject I would love to join forces with you. As you will see we thoroughly explored and dissected the whole LM theory for several months and came up with little more than a blank stare at each other.

Finally, I still keep my ear to the wall somewhat because I have friends and associates who decided to take the plunge into this quagmire and they seem to be spending more time trying to defend themselves from disgruntled clients now that they've been in the biz for a few months than they do dealing with new business which as we know is what it takes to keep the wolves away from the door.

Yes. Loan Modifications are a fatal blow for many RE agents and Brokers: Inspired by Lenn Harley's post.

I stay a mile away from Loan Modification. Nothing but trouble and I want to be a Realtor, not a loan modifier.

As if we need any more complications. Leave the complications to the lawyers!

Lenn,

Now that the real estate business is slow it's tempting for agents to get involved in these things. One way to make ends meet, but they ought to be very careful regardless.

AUG

Esko. Indeed. Agents should no more be involved in mortgage modification without a license where it's required than they should be selling real estate without a license.

Pat. Indeed.

Gene. Me too.

John and Janis. Glad to see you interested in the matter in a defensive mode. Give me a call.

LENN

As Katerina pointed out, Florida was the petry dish for incubating a science project gone bad- the science of ripping off desperate home owners. As a result, of developing tougher laws and enforcing them, most of the bacteria in the business died off.

Allison. Indeed. We ActiveRain readers were aware of the scams in Florida long ago. It alerted us to what could happen in our markets.

It's a legal minefield out there these days. Your advice is well taken.

Lenn,

I see more and more of these scams right here...they seem to flock over to the south like birds.

Lenn,

You made some great comments.

The simple fact that real estate agents and brokers are licensed professionals creates a higher standard. So "lay people" have an expectation that the information received from a licensed professional is information that is appropriate and in accordance with, their license.

So, Lenn you are right on! If your license does not specifically detail these type of actions, be VERY careful. I work with attorneys in a variety of industry segments as an expert witness. It is a matter of time before one of these attorneys starts suing (on behalf of a "wronged party").

Hi and thanks again Lenn for such a great post! you keep us well informed. I am not about to do any of the things prohibited! Real estate is enough for me. thanks again!

love your new picture!

www.charlottelakewyliehomes.com

"I'm not convinced that short sales are the only answer because, while it's definitely preferable to foreclosure, the home owner still loses their home. If short sales are the only answer, they need to be completed in a "shorter" time frame and with more honesty on the part of the lender."

Ahhh...you are such a breath of fresh air Lenn. Your comment above is spot on!!!

Anyone aware of Titanium Solutions? I came across this blog and comments.

Titanium Solutions is hired by loan servicors to contact homeowners and help them with loan modifications. You must be a licensed real estate agent. This company contacts with loan servicors and as an agent you are fed leads from Titanium for homeowners that the loan servicors need to contact to help them do a loan modification. If the loan modification is not successfull then you may pursue a short sale but you have to visit the homeowner 3 times. You are paid at the end of your assignment but not much. Anywhere between $25 to $50 dollars. Thoughts?

Lenn~

I'm sharing this post with my team ..THX

Stephanie. I looked at the page. In my opinion, in Maryland, the agents that they are recruiting would be in violation of the law.

Loan servicers do not need any entity to concate home owners. They know the mortgagors whom they srvice. They are, it would appear, using agents to contact owners, which is questionable.

Fort Collins Real Estate. I agree. Anytime a home owner who was a victim of the mortgage mess loses their home, the system has failed.

David. We are often sought out by folks seeking some relief. Sometimes we just cannot help. Of course we can list and sell short sales and bank owned properties. That's our job.

Neal. They're everywhere.

Brian. It, mortgage modification consulting, appears to be legal for agents in some states. Not in my states.

Excuse me, but why would any of us think about

RISK #1. Advising home owners in connection with a mortgage loan modification, which would include the possibility of deferral of payment on a consumer' s mortgage loan, unless you are specifically licensed to do so.
RISK #2. Accepting an up-front fee in connection with offering mortgage modification advice.
RISK #3. Offering credit repair services.
RISK #4. Offering credit repair or mortgage modification services without a written contract.

You have to be assuming that all RE agents are dumber than rocks. Unless an agent has a financial background and a license to back it up, I don't know anyone stupid enough to do any of the above. Sounds like you are trying to scare the H out of everyone. As a broker, I would assume you have trained your agents properly.

AUG

Lenn,

You make some excellent points. I think the biggest problem is that many licensees don't understand what their license allows them to do. The license, at least hear in California, is very specific in scope, allowing the licensee to participate in activities directly related to the marketing of and transfer of real property. None of the cases you mention relate to real property in this way, so I don't understand why any real estate agent would attempt them.

I do think that a real estate agent should be able to help the client by giving them the appropriate questions to ask other appropriately licensed advisors (attorneys, financial counselors, tax advisors, etc.), but I think that with each passing day this practice is also more and more likely to get a real estate licensee into legal trouble.

Sally. Anyone who doesn't understand that some RE agents and brokers are involved in mortgage modification must live somewhere under a rock.

The matter is serious enough for my primary real estate board to conduct an emergency brokers meeting to go over the ADVISORY published by licensing authorities in Maryland warning RE agents and brokers of the risks involved when agent slip over the line to mortgage modification counselors.

Many brokers in the meeting were shocked to learn that their practices in representing home sellers in short sales went over the line into mortgage modification or credit advisory practices and that they had acted in violation of MD law.

Joseph. Most states have come to this problem with new legislation or rules under existing legislation.

Lenn - One of the real estate lawyers here in NY told me a while back that we must be careful before ever discussing the possibility of a short sale too. Apparently, there are agents who suggested to people to stop making payments to qualify themselves for a short sale when the homeowner did not meet the other criteria such as job loss, major illness or other hardships.

Carol. Indeed. Believe it or not, many, see comment above by Sally that apparently believe that agents would never say anything they shouldn't.

I know from experience that on my last short sale, the listing agent went over the line when negotiating the post settlement note for the buyer with the 2nd trust holder.

Lenn, I know that you have touched on this before. I just think that advising the seller is just beyond our scope of duties. They have to meet with an attorney or financial officer for advice. Most financial people are so confused right now, I would use their advice.

Lyn. Indeed. When advising a home seller, agents need to tread very carefully and stick to real estate license law.

AUG

I think some agents can fall into this by accident so it is important to be careful and as you said, only practice our area of expertise: real estate.

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