When it comes to REO transfers I have been on both sides of the fence. I often represent sellers in their REO sales to purchasers, and I also help buyers in their REO purchases from banks. I am very well versed on almost all of the REO addendums out there, but I never assume anything and READ THE ENTIRE ADDENDUM in every file.
When we represent buyers in their purchases of REO properties we are given a set of instructions from the title agent representing the seller. Most of these instructions are pretty much boilerplate and I actually use the same type of instruction when I am representing a seller in REO. But, I came across a set of instructions on a transaction that had me shaking my head and going HUH!!
Whenever you enter into a contract of sale on an REO property is it IMPERATIVE that you read and understand the seller's counter offer addendum. This counter offer addendum is actually going to drive the transaction. Most of these counter offer addendums overide the entire contract of sale. In the instant case there was a blurb inserted into the counter offer that stated "......Buyer will pay ALL title insurance and settlement/closing fees, including those customarily paid by the Seller." OK, that's not at all unusual. Sellers in REO try to steer the closing to their retained title agent/foreclosure attorney claiming that they save time and money in doing so. But, in Maryland, the BUYER must always be given the right of choice. Buyer elected to use our services and agreed to pay all of our fees.
BUT THEN, the instructions from the seller's title agent had a line item stating..."Because the buyer elected to use your firm for closing, please collect the sum of $700.00 to be paid by buyer and submitted to seller's title agent, representing SELLER'S settlement closing fee. SAY WHAT!! No matter how I interpreted the addendum I could not find an agreement that stated that the buyer had agreed to pay the seller's title agent for a fee being charged by them to seller.
I submitted the HUD to the seller's title agent without including the requested $700 fee to be paid by buyer to seller's title agent. AND GUESS WHAT??!! No one said a word. BUT, the seller's title agent did request that we collect a total of $1175 FROM SELLER for seller's settlement fee, abstract fee and title examination fee.
So now, I wonder, what if I had included the $700 payment from the buyer? Would this have been a payment to seller's title agent IN ADDITION TO the seller paid fees that are being collected on the HUD?
I truly and honestly believe that YES this seller's title agent was trying to "double dip" their fees and they thought that they could just slide the fee in. But, because I took the time to read the entire REO counter addendum and the REO Escrow/Closing Disclosure the buyer paid only those fees that he was contractually obligated to pay.
In this case, the buyer saved $700 that should never have been charged to him to begin with. I feel pretty good about that!!
WHO IS PROTECTING YOUR BUYER FROM THIS TYPE OF ABUSE? Please make sure that you and your buyer READ and UNDERSTAND all of the ramification of any REO Counter Offer Addendum before signing. Please make sure that your buyer has elected to use the services of a closing agent who is well versed in closing REO transaction and who will, if necessary, question any thing that seems unusual.