Real Estate Agent with Lenn Harley,, MD & VA Homes and Real Estate 303829;0225082372

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



Read on Inman this a.m. an article "Loan modifications: salvation or scam?" in which they describe and even recommend that real estate agents can provide this advice and even charge for it. 

* * * * shared a number of ways that Realtors can legally assist their clients in navigating through the loan modification process and, in some cases, be paid for their efforts, more. . . . .

I believe that this is very risky business for any licensed real estate agent or broker.

Offering loan modification advice to a home owner is not, IMO, our business. We are neither trained nor skilled to give such advice and may violate the scope of our license to do so.  I'd be interested to know whether an E&O insurer would represent a real estate licensee in a claim against them for mortgage modification advice.

Most of the real estate agents I know don't know the difference between a deed and a deed of trust. Nor do they understand the structure of the loan/loan servicing, investor, markets and relationships.  When the vast majority of real estate agents must send a prospective home buyer to a loan officer for simple price range pre-qualification, the thought of those same agents giving advice and charging for it to home owners in mortgage distress sends shivers down my spine. 

IMO, real estate brokers/owners would be advised to have written policy limiting their agents' ability to offer loan modification services, paid or unpaid.


Article 11
The services which REALTORS® provide to their clients and customers shall conform to the standards of practice and competence which are reasonably expected . . more.  . . . .  

REALTORS® shall not undertake to provide specialized professional services concerning a type of property or service that is outside their field of competence . . more. . . . .

                         Home Owner Family

"Honey, how can the mortgage company be foreclosing?  I thought our agent was helping us get our mortgage modified."

"I don't know Dear.  They promised that our loan was one that would be easy for the mortgage company to modify so we don't lose our home." 

Courtesy:  Lenn Harley, Broker,, 800-711-7988.

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Comments (228)

Dennis Erickson
Berkshire Hathaway Home Services Montana Properties - Bozeman, MT
My Best..., Always!


You're right, most agents aren't qualified.  Neither are most lenders, frankly.  I have long been an advocate of taking back the task of prequalifying buyers by real estate agents instead of sending the buyer off to a third party lender who then claims the buyer as their client and does everything from mislead the buyer in to a bad mortgage or actually steer the buyer toward a FSBO owned by the lender's friend. Both things have happened to me in the LAST 2 MONTHS.  My belief is, that if you're going to be in the business of selling real estate, take the time to master the process, quit being lazy and ignorant about your business because others will, at some price, do your work for you.  It's a disgrace to send a buyer into the fray alone to seek loan modification simply because we haven't invested the time necessary to adequately represent them.  Lenders are preying on the uninformed, timid, hat-in-hand consumer who is seeking a modification.  Their track record of not responding, handing the client off to a clerk, and simply saying no tolegitimate requests for help is enough reason to become an expert in this field and, if necessary, charge for your services.  Let's quit being afraid of being a pro.

Aug 13, 2009 03:39 AM
Lenn Harley
Lenn Harley,, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland


I don't rely on loan officers to qualify my home buyers.  I do that myself.  They are ready to make a loan application when we need a lender's letter to write a Contract of Sale. 

Thanks for your comment.

Aug 13, 2009 03:58 AM
The Rains Team
Keller Williams Realty Atlanta Partners - Hoschton, GA
A higher standard in real estate

Great advice Lenn! I would never think about giving loan modification advice...I know that I don't have the knowledge necessary for that and I would never lead my clients on thinking that I do.

Have a great day,

Anne Rains

Aug 13, 2009 06:48 AM
Lenn Harley
Lenn Harley,, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Anne.  Good for you.  Many of us who do have the knowledge don't either.


Aug 13, 2009 09:03 AM
Bob & Leilani Souza
Souza Realty 916.408.5500 - Roseville, CA
Greater Sacramento Area Homes, Land & Investments

#79 said: "If you know of someone in default, who wants to stay, IMO, I would tell them this: 1) You can do a loan mod yourself with your lender at no cost."

  • Simple. True. Well said...although I haven't heard any loan mod success stories yet in my SOI.

#190 said: "We specifically tell clients that most people offering this service are scams and virtually ANYBODY charging up-front (with the exception of a few attorbeys) is a scam."

  • +1. I know a couple who gave upfront money TWICE to two different loan mod companies who did absolutely nothing for them. Why they wouldn't listen to my advice about not paying upfront fees for a loan mod, I don't's probably because the loan mod company was telling them exactly what they wanted to hear...and besides, I'm just a real estate broker friend. :)
Aug 13, 2009 09:23 AM
Lenn Harley
Lenn Harley,, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

You might be glad.  They get to realize that you were right when it fails. and you get to keep your friend.


Aug 13, 2009 09:37 AM
Bob & Leilani Souza
Souza Realty 916.408.5500 - Roseville, CA
Greater Sacramento Area Homes, Land & Investments

You're right, Lenn...they might have thought I was preventing them from getting the magical loan mod. I just don't like to see anyone lose money to the scammers and keep them in business.

Aug 13, 2009 10:07 AM
Lenn Harley
Lenn Harley,, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Souza.  Sometimes we can't help folks.  If we are not in a position to grant the loan mod, if their attempts fail, they'll blame everyone but themselves. 

Aug 13, 2009 09:32 PM

My advice is for realtors to practice only their profession.

Some of the the biggest blunders causing fingerpointing is when realtors "refer" another business.

Dont refer a mortgage company
Dont refer a Home inspector
Dont refer a closing company
Dont Refer a termite inspector

And please,  dont bore me with the "i provive 3 names"  Thats bull and we all know it



Aug 16, 2009 02:34 AM
Lenn Harley
Lenn Harley,, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Michael.  Au contraire.

I recommend loan officers, home inspectors, title companies and termite inspectors.

I'm a buyers agent and my buyers rely on my experience and advice in all matter.  However, I refer the same vendors that I use myself. 

I'm not about to send home buyers with no or limited experience to the phone book or friends or neighbors who don't have my experience or knowledge of real estate transactions. 

Of course, if a buyers has a vendor they wish to use, then I will meet someone new.  Through my buyers is how we meet many good service providers. 

Aug 16, 2009 04:32 AM
Pat & Wayne Harriman
Harriman Real Estate, LLC (203) 672-4499 - Wallingford, CT
Broker/Owners, Wallingford CT Real Estate

I agree with Lenn wholeheartedly. (BTW, great picture, Lenn!)

I recommend vendors that not only we use ourselves, but that other clients have said treated them like gold. I don't tell clients they have to use them, only that these are recommended service providers that are trustworthy and will bend over backwards to help. They are certainly free to use whomever they choose, but the vast majority of people have no clue about who to choose for a lender, inspector or any other service, and almost without fail they welcome and appreciate our recommendations. If we ever hear that a vendor we have recommended has provided less than stellar service, they are removed from our list. And we have NEVER had any issues arise from any vendor recommendation we have made, and only once have we had to stop recommending a vendor.

Lenn, did I mention I love your new picture?  :-)

Aug 16, 2009 05:12 AM
Lenn Harley
Lenn Harley,, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Pat and Wayne.  Agreed.  I don't know how we can profess to be a Buyer's Agent or Broker without providing good recommendations to get us through the transaction.  I believe it's part of our duty of fiduciary. 

Granted, agents with companies that take kickbacks or have affiliate relationships are in a quandry.  Not me. 

Aug 16, 2009 05:50 AM
Daniel J. Hunter
REALTOR® - New Port Richey, FL

I am so glad I did not just delete all the 600+ emails yahoo had waiting for me today.  yes its been a few days since I checked it, but what  long list.  wish I could turn off some of the notifications as 90%+ were AR

another great post LENN.  There is a lady in my office, who seems to have her hands in everything.  

a. I think she is spreading herself too thin

b. She is opening herself up to too much liability.  Try to be an expert in everything and you fail at everything IMHO.  Specialize and outsource the rest.  You simply can not be everything for everyone.  Its impossible. Pick what you are best at, or love the most, and build a great network

Aug 18, 2009 08:05 AM
Lenn Harley
Lenn Harley,, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Daniel.  Agreed.  In Maryland, one of my states, it's illegal for agents to claim to be an "expert" something unless they are.  With mortgage mod, a license is required and it's not a real estate license.


Aug 18, 2009 08:41 AM
Mark Velasco
Sharpstone Commercial - Whittier, CA
Top Producing COMMERCIAL Team 30+ years experience

I would be the last person trying to do a loan mod. My business is selling real estate. That's more than enough for me

Aug 19, 2009 05:08 PM
Lenn Harley
Lenn Harley,, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Mark/  Agree.  Me too.


Aug 19, 2009 08:58 PM
Charles Perkins
Charles G. Perkins, CPA - Burien, WA

As I understand it the mortgage company is the one that eventually decides on when or if they will do a loan modification.  Outside professionals or businesses are trying to sell you on the fact that they can provide support as to why this loan modification should be done.

Aug 23, 2009 05:48 AM
Jerry Spicer
Sonoran Property Inspections LLC - Scottsdale, AZ

What a way to loose your license and get sued all at the same time. I can't imagine an agent not understanding this. I would imagine an E&O Insurance company would leave you hanging in a new york minute if they found out you are practicing Mortgage advice on the side. 

Aug 23, 2009 04:13 PM
Lenn Harley
Lenn Harley,, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Charles. Indeed and sometimes they violate RE license law when they do so.

Jerry.  I believe that E&O would leave you hanging anywhere for these acts if they violate license law.


Aug 23, 2009 10:15 PM
wayne robison

With all due respect this is bad advice.  Real estate agents are providing loan mod assistance for 3 general reasons:

To make money on the loan mod

To generate short sale listings

Because they are asked

As long as the agent has educated themselves on the nuances of loan modifications and operate within their state laws, they would be doing the market a disservice not to offer assistance (paid or not).    The fact of the matter is that loan mods are not rocket science especially once federal guidelines were instituted. 

Now, if you really want to risk your license, go ahead and learn nothing about loan mods and list and sell a home short.  Only later to find out that the homeowner has contacted the Attorney General and filed a complaint against you and your Broker because they learned, post sale, they were eligible for a loan modification under the Making Home Affordable Plan, BUT their Realtor never said anything about it.

Good Bye license, Hello law suit.

All the best,

Wayne Robison,

Oct 03, 2009 01:57 PM