Does your short sale agent " have a guy " that handles the negotiations with your lender? If so, there's a pretty good chance " the guy " and your agent are both breaking Connecticut law. Under Connecticut law, in order to negotiate a short sale for a fee, the individual must hold a debt negotiation license with the state of Connecticut.
From the States Department of Banking website:
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Licensed Debt Negotiators, for a fee, offer the services of assisting a consumer faced with significant debt or negotiating on behalf of a consumer, the terms of a consumer's obligation to a mortgagee or creditor, including:
- Negotiation of a short sale of residential property (one to four family owner-occupied real property);
- Providing services related to avoiding or delaying actual or anticipated foreclosure proceedings; and
- Addressing the delinquency and default of a mortgage loan.
Please note that 1) attorneys practicing law in Connecticut, 2) banks and credit unions, 3) licensed debt adjusters and 4) non-profits are all exempt from this license.
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It should also be noted, that Realtor's are also exempt from having this license providing they are not charging the consumer any fee other than their real estate commission.
Okay you say, so what's the big deal? Well, agents that are inexperienced in negotiating a short sale have been outsourcing the negotiations and clients personal information to a third party. Many of these third parties hold neither a debt negotiation license OR a real estate license. It has been found that many of these third parties have also been taking a portion of the real estate commission as payment for their services. Both of which are illegal.
Joint letter from the Connecticut Department of Consumer Protection and Department of Banking today:
I negotiate all of my own short sales and would never outsource your personal information to a third party. If you're currently short selling your home, or interviewing short sale agents, and the agent you are speaking to, " has a guy ", that agent could very well be breaking the law and not even know it. Not only is it important to ask questions, it's also important to ask the RIGHT questions.
CT debt negotiation FAQ are here : http://www.ct.gov/dob/cwp/view.asp?a=2232&q=448490
CT schedule of maximum fees are here: http://www.ct.gov/dob/cwp/view.asp?a=2232&q=447776
CT licensed debt negotiators are listed here : http://www.ct.gov/dob/cwp/view.asp?a=2233&q=449828
As always, you need to be well informed in order to make the best decision for you, and your family. For a FREE, confidential consultation on short selling your home in most of Connecticut, please feel free to contact me any time.
Patrick
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