Freddie Mac Short Sale Addendum - Item #13 - I DON'T THINK SO!!
OK, I NEVER reblog another blog - but this one merits an exception.
The parapgraph 13 is very problematic because as worded, each signatory is liable for the acts of others and their relationship to the transaction. So a closing agent would be liable to the lender for the seller lying on its financial statement - even if the closing agent had nothing to do with the short sale processing. The liability could be the value of the transaction (loss) to the lender - or more! For the non-Californians reading this, disregard the reference to SB931 and SB458 as it is state (California) specific. I think that anyone signing this form must limit their liability to information furnished by the individual signor and exempt themselves from any information provided by others.
Further examination shows that the document even has a serious spelling error (2nd sentence of paragraph 12), and although it keeps talking about misrepresentations in the "affidavit", that document is never identified. Further, the signatory lines for the closing agent, seller agent and buyer agent are all "agents" but none are specifically identified as the "Agent" specified in the opening paragraph. Also, the "facilitator" must sign, but is not identified as a "Party" to the document. Lastly, the buyer and seller agent don't seem to have the statement that they executed the agreement, although they are signing it, and none of the remaining signature lines have the statement either.
After futher review, the document is really quite a mess.
Freddie Mac Short Sale Addendum - Item #13 - I DON'T THINK SO!!
The Freddie Mac Addendum is often a required doc for the bank in a short sale transaction.
I've had 2 short sales with BofA recently that have a Freddie Mac Short Sale Addendum as part of the transaction, however I see a new added Item #13 that reads the following:
"13. Each signatory agrees to indemnify the Servicer and Freddie Mac for any and all loss resulting from any
negligent or intentional misrepresentation made in the affidavit including, but not limited to, repayment of
the amount of the reduced payoff of the Mortgage;"This is basically stating that all parties to the transaction, Seller, Buyer, Seller's Agent, Buyer's Agent, Escrow, and Transaction Facilitator are liable for the balance of the deficiency.
I DON'T THINK SO!
What are the banks trying to pull here?
The last time we had to submit this, I coupled it with a signed letter stating that all other parties are not liable for mis-representations by the seller and that the document is being signed under duress due to the transaction at hand.
I'm going to continue to do that, and hold that SB931 and SB458 trumps all in that the bank can no longer pursue the deficiency after a short sale closing.
I, as an agent and a short sale facilitator, can only take the information provided to me from clients and other parties to the transaction for face value. I do not have the ability, nor is it my place to become a private investigator. Also, the agency disclosure that we all sign states there to be an implied fiduciary relationship between myself and my clients - meaning I take what they provide me to be the truth, and vice-verse.
Here is a copy of the addendum:
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