The power of social media has been proven again as I posted on my Active Rain blog and several other short sale specific blogs about Bank of America's ridiculous request to have the individual real estate agents sign the purchase contract and also our individual names on the Hud-1. Although I informed the negotiator that it would be breaking current State of IL contract law for signatures on the purchase contract and IL Real Estate Act 2000 on the Hud-1 since Realtor must be paid directly by the sponsoring broker. You can read my original blog here!
As I was driving to an appointment I received a call from someone on behalf of Bank of America who wanted to know my side of the story regarding the blog I wrote about Bank of America trying to force agents to break state law. I asked her which of the 3 blog posts she had read and that I would be happy to discuss the situation with her. I explained everything in great detail...the fact that this file has been in process since April, 2012, the fact that we have had numerous negotiators, the fact that we have lost 2 buyers already and the fact that BOA's request would break my local Real Estate Associations advise, state law and just common sense. Only the buyer and the seller are party to the purchase contract. Everyone else is a service provider to the real estate transaction - the Realtor, attorneys, lender, and the HOA/management company.
All that information is provided in our standard contract for informational purposes. But not for signature. So why would only the real estate agents be targeted to sign the contract? For what purpose is having the real estate agents sign the contract? The same goes for the Hud-1. Although no one has informed me the "why" behind the request apparently I rattled enough cages that I had another call this morning from the negotiator's supervisor.
He informed me that he had spoken to the closing attorney (i.e. seller's attorney) and understood our concern and had done research and knew we were right regarding the signng of the real estate purchase contract. Regarding the HUD-1 issue they came to an understanding that the agents names would be included in parenthesis after the brokerage names. Despite a lot of verbiage again the reason behind the request was not given.
Apparently the checklists for documentation is not state specific although they are working on that. That is the excuse that Bank of America has. Considering that they have physical banks in Illinois you would think that a call to their local mortgage division's underwriting staff would have given them the Local rules and regulations.
Assuming the rules are the same across all 50 states is a stretch. I would love to know in what states the real estate agents sign the purchase contract. Can anyone that knows of a state where this is common practice please let me know by commenting on this blog.
The bottom line is that after the closing attorney submits the new Hud-1 with the agents names included we should get an approval letter that we can give the buyer to start their mortgage process. They are so sorry and they promise to do better. Time will tell and hopefully they now realize that you need to be state specific in a heavily regulated industry such as real estate.
Moral of story: Don't break your state law to complete a short sale request by a bank. Escalate internally if possible. If that does not work and you know you are right - blast it on social media as often as necessary. Make a complaint to HUD, the Consumer Financial Protection Board, your local association, state association and NAR. Don't be bullied by banks requirements that have nothing to do with the seller's qualification for a short sale. If we don't stand up for ourselves and our clients, who will?