Agents....Are You Risking Your Real Estate License By Negotiating a Short Sale?

By
Mortgage and Lending with Guaranteed Rate NMLS# 2611 NMLS #151088

Agents, are you risking your real estate license by negotiating a short sale with your seller's lender(s)?  If you are doing short sales in Georgia, you just may be.  With the SAFE Act of 2008 being implemented in Georgia last year, rules have changed when it comes to what a real estate agent can and cannot do concerning a mortgage. 

Real estate agents are generally exempt from having to be licensed as a Mortgage Loan Originator so long as they are not involved in the negotiation of mortgage loans/terms.  With the implementation of the SAFE Act, a number of questions have arisen concerning real estate agents.  The Georgia Department of Banking & Finance has provided a great Q&A piece that addresses some of the most common concerns that a real estate agent might have.  Some examples are:

General Mortgage Advice by a Real Estate Agent

Q: Can a real estate broker or salesperson advise a consumer on the benefits of a specific type of loan such as FHA, VA, Conventional, Adjustable, etc?
A: Yes, you can advise a consumer on a type of loan, however you may not direct a client to a specific loan.

Q: Some real estate firms have affiliated business arrangements with mortgage companies as authorized under RESPA. Under GRMA, can a real estate broker or salesperson recommend a mortgage company or companies to a consumer?
A: Yes, a real estate broker or salesperson can provide a list of mortgage companies to a consumer. However, a real estate broker or salesperson cannot negotiate, place or find a mortgage loan for a consumer and may not make any decisions in regards to a mortgage on behalf of a consumer.

Short Sale Negotiation by a Real Estate Agent

Q: In a short sale context, can a real estate broker or salesperson provide facts and information regarding the subject property to the lender.
A: Yes. Providing facts and information to a lender for a client does not require the real estate broker to obtain and maintain a Mortgage Loan Originator License.


Q: In a short sale context, can a real estate broker or salesperson negotiate the terms of loans for their clients?
A: No. Negotiating terms of any loan and/or modifying the current loan terms for a client with a lender would require a Mortgage Loan Originator License.


Hypothetical: Bob owns a house that, in today's market is worth $250,000. Bob purchased the house in 2004, paying 400,000. Bob's current loan balance is $375,000, meaning that he is $125,000 "upside down". Last year Bob lost his job as a corporate manager. He finally found work 6 months later but for a significantly reduced salary. Bob is 4 months behind on his mortgage and has received several letters from his lender threatening foreclosure. Bob has not been able to get in touch with his lender and has called you the real estate agent based on your advertising as a "short-sale specialist".


Q: Bob has not heard back from his lender's "work-out" group and his current job forces him to be away from the phone most of the day. Can Bob's real estate agent contact the lender for him?
A: If a real estate agent has a signed authorization form, acceptable to both the borrower and the lender, the real estate agent may contact the lender to obtain the necessary facts to market the property.

Q: You conduct a market analysis on Bob's property and recommend a list price of $275,000 to allow room for negotiation with a buyer. Can you as the real estate agent provide this information to Bob's lender?
A: Yes. You can share the facts with Bob's lender.

Q: Bob's property sits on the market for a few months with no offers. Can you, as the real estate agent, contact the lender to persuade the lender to postpone foreclosure?
A: No. Again, as the real estate agent you can provide facts and information to the lender, but you cannot negotiate terms, includingforbearance, with the lender without obtaining licensure as a Mortgage Loan Originator.

Q: An offer has been received on Bob's house. The offer is for $225,000 "as-is". Can you, as the real estate agent, forward the offer to Bob's lender?
A: Yes, as the real estate agent you can provide facts and information to the lender.

Q: Can you include a letter to the lender, saying that you believe this offer of $225,000 is the best price obtainable for Bob's property and urge the lender to approve the sale before the potential buyer moves on to another property?
A: No. Again, the real estate agent is in a position to provide facts, i.e. the subject property has been on the market for X number of months, that X number of potential buyers viewed the property, and that X number of offers have been received on the property. The lender can make its own determination as to what the best price obtainable is for the subject property.

Q: Bob's lender has approved the $225,000 offer. However, Bob's lender says it will not allow Bob to pay you the 6% commission you negotiated with Bob. Rather it will only allow a 4% broker's commission. Can you call Bob's lender and try to explain why the 6% commission is more reasonable considering your effort to market and sale the property?
A: According to our interpretation, the answer here is yes. The real estate agent may contact the lender regarding the real estate agent's compensation. The Department is aware that HUD has received a request from the National Association of REALTORS®and perhaps others to clarify this area. Should HUD provide additional guidance surrounding the issue, the Department retains the right to follow HUD's interpretation and guidance if it deviates from the current interpretation.

The above Q&A was taken directly from the Georgia Department of Banking & Finance website.  The information is subject to change at any time without notice.  To receive the most update to date information, you can visit the GA Department of Banking & Finance online.  Most of the above is GADBF's intrepretation to the SAFE ACt. 

 

 

 

 

Posted by

 

It is always advisable to consult with a knowledgeable lending professional when navigating today's turbulent mortgage and real estate marketplace.  I am committed, qualified and equipped to help you evaluate your options!

 

Also check out:

Conventional Financing Mortgage Program Overview/Updates

FHA Financing Mortgage Program Overview/Updates

USDA Financing Mortgage Program Updates  

 

Programs Include:

 

  • Conventional (Fannie Mae & Freddie Mac)

  • FHA, USDA, & VA

  • Jumbo to $3,000,000

  • Bank Statement Program for Self-Employed Borrowers

  • Foreign National Program

  • Investor Cash Flow

  • Non-Warrantable Condos

  • Georgia Power Leaseholds for Lake Burton, Rabun, & Seed

 

  • ************************************************************************************************************
  • Rodney Mason is a Licensed Branch Manager located in Atlanta, GA.   He can be reached at (404) 591-2453.
  • Providing financing for all cities across Georgia including: Acworth, Albany, Alpharetta, Athens, Atlanta, Augusta, Austell, Avondale Estates, Blairsville, Bloomingdale, Blue Ridge, Bogart, Brunswick, Buckhead, Buford, Canton, Carrollton, Cartersville, Chatsworth, Clayton, College Park, Columbus, Commerce, Conyers, Covington, Cumming, Dahlonega,  Dacula, Dalton, Dawsonville, Decatur, Doraville, Douglasville, Duluth, Dunwoody, East Point, Fayetteville, Flowery Branch, Gainesville, Greensboro, Hampton,  Hapeville, Hinesville, Hiram, Jackson, Jefferson, Jonesboro, Kennesaw, Lagrange, Lawrenceville, Lilburn, Lithia Springs, Macon, Madison, Metter, Morganton, Morrow, Newnan, Norcross, Oakwood, Peachtree City, Pooler, Richmond Hill, Riverdale, Rome, Roswell, Sandy Springs, Savannah, Scottdale, Statesboro, Stockbridge, Stone Mountain, St Marys, Sugar Hill, Suwanee, Thomasville, Thunderbolt, Tucker, Tybee Island, Valdosta, Waleska, Warner Robins, Waycross, Wilmington Island, Winder, Woodstock, and many more.

    Providing financing for all cities across Alabama including:
    Alabama Port, Anniston, Athens, Auburn, Bessemer, Birmingham, Boaz, Bridgeport, Cedar Bluff, Chickasaw, Clayton, Coden, Dauphin Island, Decatur, Dothan, Eufaula, Fairfield, Fairhope, Florence, Foley, Forestdale, Fort Morgan, Fort Payne,Gasden, Grand Bay, Gulf Shores, Heron Bay, Homewood, Hoover, Jasper, Josephine, Madison, Meadowbrook, Midfield, Mobile, Mon Louis, New Hope, Orange Beach, Oxford, Oyster Bay, Phenix City, Prichard, Rainbow City, Saraland, Satsuma, Scottsboro, Selma, Troy, Theodore, Tillmans Corner, Trussville, Tuscaloosa, Vestavia Hills, Warrior and many more.

  • Providing financing for all cities across Florida including: Altamonte Springs, Atlantic Beach, Boca Raton, Bradenton, Cape Coral, Clearwater, Coral Springs, Daytona Beach, Delray Beach, Destin, Fort Lauderdale, Fort Myers, Fort Walton Beach, Gainesville, Hollywood, Homestead, Jacksonville, Jupiter, Key Largo, Key West, Lake City, Largo, Marathon, Mexico Beach, Miami, Naples, New Smyra Beach, Ocala, Orlando, Palm Coast, Panama City Beach, Pensacola, Pompano Beach, Port St Joe, Sanibel Island, Sanford, Sarasota, St Augustine, St Petersburg, Tallahassee, Tampa, Vero Beach, West Palm Beach, & Winter Park, and many more.

 

  • Providing financing for all cities across South Carolina including: Aiken, Anderson, Beaufort, Bluffton, Charleston, Columbia, Conway, Edisto Island, Florence, Greenville, Hilton Head, Johns Island, Myrtle Beach, North Augusta, Orangeburg, Rock, Hill, Spartanburg, Sullivans Island, Summerville, and many more.  
  •   

    Providing financing for all cities across Tennessee including: Athens, Brentwood, Bristol, Chattanooga, Clarksville, Cleveland, Cookeville, Dyersburg, Franklin, Gatlinburg, Greeneville, Johnson City, Kingsport, Knoxville, Maryville, Memphis, Morristown, Murfreesboro, Nashville, Newport, Oak Ridge, Pigeon Forge, Sevierville, and many more

 

All mortgage lending guidelines are accurate at time of post, but are subject to change without notice.  Please call for the most current information.

    

           

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
ActiveRain Community
Location:
Georgia
Groups:
North Georgia Real Estate
Georgia Real Estate
Georgia Association of REALTORS®
MetroAtlantaRealEstateProfessionals
Diary of a Realtor
Tags:
realtor
finance
atlanta
georgia
agent
negotiation
banking
department
negotiator
real estate
ga
short sale

Spam prevention
Show All Comments
Rainer
390,804
Nor Yeretsian
Envoy Capitol Realty Inc. - Toronto, ON
Envoy Capitol Realty Inc., Brokerage Toronto

Good Caution to Realtors . Good information and example.

Thanks for the post , Rodney.

Cheers

Nor Yeretsian 

Nov 30, 2010 01:26 AM #1
Rainmaker
535,305
Gay E. Rosen
Julia B. Fee Sotheby's International Realty - Larchmont, NY
As Real as Real Estate Gets!

Thank you Rodney: Interesting info. Best, Gay

Nov 30, 2010 01:29 AM #2
Ambassador
687,085
Ann Allen Hoover
RE/MAX Advantage South - Hoover, AL
CDPE SRES ASP e-PRO Realtor - Homes for Sale - AL

Hi Rodney!  I've not been involved in many short sales and appreciate this information.

Nov 30, 2010 01:37 AM #3
Rainmaker
423,801
Rodney Mason
Guaranteed Rate NMLS# 2611 - Atlanta, GA
VP of Mortgage Lending - AL, FL, GA, SC, & TN

Nor....Thanks for stopping by.

Gay...Glad you liked it.

Ann.....I can't recall Alabama's stance.  I want to say that is is pretty much the same as GA though.

Nov 30, 2010 01:44 AM #4
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
423,801

Rodney Mason

VP of Mortgage Lending - AL, FL, GA, SC, & TN
Ask me a question
*
*
*
*
Spam prevention

Additional Information