Reports of an FBI crackdown on short sale agents, what are you doing to protect yourself?

Todd, i agree the FBI should be looking diligently at the REO agents who have family members make the winning bids & are shown houses prior to even making it to market...this happens here because a number of us have seen it...on our short sale addendum the bank sees the signed addendum saying that no other offers will be brought forward until they give accept or reject the one submitted. My attorneys say i'm covered...we always keep any backup offers in place, if there are any, in case the first is refused...interesting additional paperwork you have...

Here is an example of what I am talking about:

http://newhaven.fbi.gov/dojpressrel/pressrel10/nh021910a.htm

So that I understand...The Long Island Board of Realtors writes a post, saying that the FBI is investigating this.  In their post, there is no source for the information.  Normally, federal agencies that institute new policies (such as this) have some sort of a "directive" or a letter, stating this.

I'm thinking until I see something officially come out of the FBI, we have nothing to talk about.  Blog posts like the one at LIBOR are the ways rumors get started (i.e. Wells Fargo no longer extending foreclosure auction dates rumor).

Like many others here, I personally feel that the lender does not own the property.  They are simply a third-party that either accepts or denies the short sale.  Until they own it, they can't force anyone to send them anything.

The document is a good idea - placing the responsibility on the bank to cover yourself. It seems short sales are getting more complicated than they're worth.

Todd - Our contract and short sale addendums clearly state that we are prohibited from submitting more than one offer to the lender. 

If we're talking about short sales, I'm comfy sending one CONTRACT to the bank at a time. Can't speak for anywhere else, but in Utah, I'm required to submit all offers to the sellers only. The bank isn't a party in the transaction at the "offer" stage, only a third party. My client is the seller. 

Todd,

The link that Renee pointed out is obviously mortgage fraud. The listing agent famboozled (attempted to) the bank and especially the seller. That's entirely different in my book. Realtors fiduciary responsibility is to their client, not the lener. As you know, the lender doesn't sign the listing agreement, the seller does. We still have an obligation to treat the lender fairly, and with that said, common sense should be exercised when trying to screw the bank and attmpeting to buy the home with your own investment company - hello!

I would submit one executed offer at time to the lender, and not ALL offers; that's not what I would consider logical or expected by an bank. If it becomes law, so be it. I furthur speculate that most banks want nothign to do with 44 offers at once.

Great conversation piece.

You're talking about short sale flippers, and that has nothing to do with most short sales involving a regular agent and the bank. The bank can't dictate because the bank doesn't own the home. Agency is between the listing agent and the seller. As long as neither of them are conspiring to defraud the bank, offers go to the bank as directed by the seller. In fact, I have a form that my company uses for this express purpose. If I receive a backup, the seller signs this form, directing me to a) send the offer or b) don't send the offer. That is not my choice to make.

Should the FBI investigate mortgage fraud like this? You bet. But does it affect a regular short sale agent? No.

Good idea if you can get the bank to sign it and in a timely manner. They'll probably lose it or claim to lose it. Anything to cover their asses. I hope the people who receive the documents know what to do with them. We usually get the same answer...only looking at one offer at a time...once signed and executed as accepted...we inform the agents that we can only accept back up offers. We've had agents beg to submit the others even if the bank has told us not to. Some prefer not to listen to us and then cry later why they weren't even entertained.

That is interesting! Thanks for sharing!!

Todd,

This is a new wrinkle. Fortunately, in Toronto the market has been strong, so there is lots of equity and rarely a short sale.

Brian

I will not change.. I'm working for the seller , the homeowner. . not the bank

I have a listing agreement with the seller and they will and can only accept ONE OFFER

 

We have more to worry about it in the MARS ruling than this. . .

 

 

 

I'm glad to see that the FBI has finally realized these bad real estate agents must be stopped.  The innocent banks have been getting victimized for years.

I'm just thankful I don't deal in foreclosures or short sales. I just knew they were a headache for some reason.

Great debate. Our Arizona Association of Realtors Short Sale Addendum states that "Nothing shall limit a Seller from accepting subsequent offers from subsequent buyer(s) and submitting the back-up contract(s) to the Seller's creditor(s) for consideration...."

Nothing says they HAVE to. Savvy Buyer's Agents are striking this clause and specifying that the Seller shall not accept or submit additional offers to the bank until and unless this offer has been evaluated by the bank and if not approved, is withdrawn.

It's the seller's call whether to accept the offer with these conditions, or not.

Sure, why not push this onto the real estate agent as well.  Personally, I don't recall making all these bad loans, and allowing people to use their homes like ATMs.

The seller and my agency is with the Seller of the property not the bank. I do what the seller wants, and the seller is not the bank.

The FBI shouldn't be in the short sale business. How about gangsters and terrorists? That's where I want my taxes spent. 

The important distinction to made here is between offers and contracts. All offers go to the seller, but only one contract to the bank.

Todd:

You are correct when you 90% of the time the banks do not want other offers.  Now they will have to agree to accept any other offers that come in.  Or the FBI will get them.