Replies to This Discussion

Permalink Reply by Smitty on September 1, 2011 at 1:38am

Richard,

 

A listing agent has a fiduciary responsibilty to the SELLER not the buyer (unless they are a dual agent).  If seller takes offer A which is lower for whatever reason, offer B has no rights to know anything about the terms of A's offer.  The listing agent then works on A's offer to get it approved (or has a 3rd party work on it - but that's a whole other debate) - If B feels slighted because they have a higher offer or upset and pushes the listing agent to submit their offer and the listing agent does, guess what?  They have JUST BREACHED their fiduciary responsibility with the seller.  Let's say the first offer was 3/4's of the way through the process, and there is an auction set, and the submission of the 2nd higher offer, resets the clock back to zero and now the listing agent can't stop the impending auction the SELLER can SUE the listing agent for tortious interference of the first contract.  OH and guess what, the A buyer can ALSO sue for interference of the contract.

 

The buyer only needs to know limited updates on the file.  If the lender starts asking the listing agent for new financials or questioning certain things about the sellers hardship, that is not information I would share with the buyer.  I may say, "the lender is requiring more information from the seller" but that's about it.  Again, the duty of the list agent is to protect the seller.  The buyer's agent should be protecting the buyer and if it's a dual agent, then you have to do a bit of a juggling act like above.  Maybe telling the buyer that the lender is still reviewing paperwork. 

 

It's not the lender's CHOICE to lose money...BELIEVE me with all the misleading press about the 3F's lately, they are doing EVERYTHING in their power to minimize their losses, but I keep in perspective what Freddie Mac wants and what my sellers want, may be two totally different things.  My duty is NOT to Freddie Mac.  Freddie Mac can kick and scream all they want, but I will continue to do what is in the best interest of my client.  I believe any agent worth their weight in gold is only submitting one offer at a time.  It's their license on the line if they decide to submit more than one and risk being sued. 

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Permalink Reply by Jeff Payne on September 1, 2011 at 2:13am

Richard, I will put this back on the agents involved in the transaction.  It is their job to keep you informed, not the banks job.   The listing agent can easily tell you where the file is at any time and should at least once per week, if not the buyers agent needs to be asking at least once per week where the file is.

As far as submitting back up offers, again, that would be a mistake on the listing agents part in my opinion but if it happens the listing agents should be disclosing that and giving you regular updates.

If a buyer purchases the home for less than your offer, maybe or maybe not do they owe you an explanation.  Remember that the seller still owns the home and can do what they want with it and if they don't accept your offer there is nothing saying they have to tell you why. if they didn't accept your offer, there was no wait for you because there was no offer to wait for approval.
If several offers were shopped simultaneously then I would say the listing agent did their job because their job is to bring offers to the seller and advise the seller how to proceed.  Once that seller accepts an offer, that should be it and all others are in back up position until the first is dead.  For me, I really never advise buyers to go into a back up position because there are plenty more fish in the sea.

Also, if someone slipped a lower offer in after YOUR offer was accepted, I agree, someone has some explaining to do but then again, it goes back to the agents involved. that is why we interview ALL listing agents before ever showing the property to our buyers, if we don't like thier answers, we move on..

With all of that being said, I do feel your frustration and understand.  The lesson in all of this should be to choose your agent wisely when dealing with short sales.
Richard said:

Hi Jeff,

 

I think it comes down to how back up offers are submitted and whether or not several offers are shopped simultaneously.  If a dual tracking system is used, the buyer's agent will see the progress of his/her offer file while they're under contract.  Not transcational information, just the file movement and milestones.  And, if there's no movement and someone else ends up with the home at a lower price, then an explanation is owed to the buyer and their agent. Red flag.  It's a simple an honest process.  I don't think that's too much to ask for someone who's willing to wait for a duration through the process.

 

Make no bones about it, in all my engineering and business schooling, time is money.  Time can be wasted opportunity as well.  So it does adversely affect a buyer when and if crimes are committed.  I see someone slipping in a lesser valued offer unbeknownst to the original buyer's agent or, even withholding crucial information from a lender for someone else's (third party) gain is a problem.  In the long run, it hurts everyone, especially since the price of goods and services during a crushed economy tends to get levied on everyone. Especially since the feds spends everyone's money trying to get us out if it.  And, besides a reasonable cash offer why would a lender want to settle for less.

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Permalink Reply by Jeff Payne on September 1, 2011 at 2:21am

Richard, with all due respect, I think that you are missing the point, you should know exactly where your file is in the system but that is not the banks job, it is the listing agents job.  With any file that I have right now, whether it is a short sale, REO or equity sale (yes we do have some of those), I can tell you EXACTLY where that file is at any time.  Problem is that your agents are not keeping you informed.
You are correct, there should be one file in the system.  Matter of fact, many lenders will only take one file at a time because that is the way their system is set up.  So it would be very hard for the lender to see the back up offer and if it was lower than yours why would you care?  If the seller accepts more than one offer AND submits them both, they open themselves up to legal action.  Accepting a short sale is not any different than any other sale.  A seller can only sell the house once to one set of buyers.
Richard said:

Hi Smitty,

 

I fully understand that a seller would want to keep the terms of their offer confidential.  I'm not asking to necessarily know the terms of the other offer, not at all.  All I am saying is the travel of the one and only file through the lender's system should be available for both parties to see.  If another file is reviewed then it should be after the first has been rejected.  I believe a true short sale buyer is only going to raise questions if the file has come to a complete halt for months on end.  However, if there is reasonable evidence to support disclosing the terms of the offer to a neutral party because because fraudulent activity or evidence is found, then I think that would be fair. 

If the lenders want to lose money, that's their choice.......not a good choice in my opinion.  But then again, that's why we're in this mess, bad choices.  I agree in a perfect world, back up offers would usually never be seen by the lenders until the first deal is dead.  However, do you really believe that happens 100% of the time?

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Permalink Reply by Jeff Payne on September 1, 2011 at 3:16am

Thanks for the link Harry, I will take a look.  I remember reading about this when it went down but dont remember it being short sale fraud, but straw buyers who were taking mortgages but never paying them?

Harry Clay said:

One of California's the biggest mortgage fraud scandals of the last decade has been unfolding right here in Bakersfield, & is still winding its way through federal court up in Fresno as we speak.

 

Google "Crisp & Cole Bakersfield" & you will find an extremely tangled web of mortgage fraud misdeeds involving a large number of previously upper echelon agents.

 

http://www.kget.com/news/local/story/Crisp-and-Cole-arrested-in-hug...

 

Needless to say, it is a very sensitive subject in this town, & the scandal brought down a former powerhouse company.

In the article Iink above, it confirms appraiser Gary Crabtree was one of the first to bring the C&C case to the attention of federal officials. Basically all of the allegations have been correct, to date.

 

Gary Crabtree also is quoted in the new MSN article at the beginning of this thread.

 

You can make of that what you will.

  
Smitty said:

...look up short sale fraud convictions and report back how many cases you find. 

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Permalink Reply by MSI on September 1, 2011 at 5:30am

I guess, that is why Madoff could operate for decades without getting caught. But again - in your view, there was no fraud - just some people who felt slighted or someone who couldn't invest with Madoff.

eff Payne said:

Richard, back to the original post about fraud, what would a dual tracking system accomplish?  If you are the buyer that is under contract, you should not be left in the dark anyway, regular updates should be given from your agent, If you were not the buyer under contract, no one would owe you any explanation. 

The problem with fraud talk is that it usually comes from someone who feels slighted or someone who didn't get the house.

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Permalink Reply by Richard on September 1, 2011 at 7:13am

Jeff, Smitty and Harry,

 

I know that I'm new at this but have patience with me.  But then again, I don't think short sales in this sense and magnitude has been around for many years either.  You guys are the short sale agents that everyone could only wish they had.  You guys are on top of your business.  But then, there are many that aren't.  This is the reason I felt it necessary to get an agressive dosage of Short Sale 501 so that I wouldn't feel taken and end up as a statistic as many others have.  It's not a matter of me being paranoid, but rather proactive and preventative (maybe a carry over from my sports days). 

 

Anyway Jeff, you are correct that I should know where the file is at any time.  In my case, frankly I don't think the listing and selling agents have much confidence with the lenders and negotiators processing skills at this point.  I will say, from the start they warned me who we were dealing with.  Here's my point, with a dual tracking system, there is visibility and accountability on every party's end.  The question is, do they (seller and lender) really want this transaction to go through?  If so, why not be accountable for your actions?  Why do some short sellers ask for earmest money from the buyers up front?  I believe it's because they want a commitment?  Then, why can't there be a commitment from the other partys as well? 

 

Smitty, regarding the under-the-table transactions, there's a reason for the arms length affidavit.  I just don't think lenders all of a sudden came up with that process.  I believe there is merit to Harry's points.  I'm not saying that the entire industry has been absorb with criminal activity to the highest level, I'm merely saying that it does exist and maybe more than we know.  I think that the short sale process have very little transparency and that leaves room for some criminal activity.

 

As a young kid, I used to hear two similar quotes:

"Do unto others, as you would have them do unto you"

"Do unto others, before they do unto to you"

 

Jeff wrote:

Richard, with all due respect, I think that you are missing the point, you should know exactly where your file is in the system but that is not the banks job, it is the listing agents job.  With any file that I have right now, whether it is a short sale, REO or equity sale (yes we do have some of those), I can tell you EXACTLY where that file is at any time.  Problem is that your agents are not keeping you informed.

 

Smitty wrote:

A listing agent has a fiduciary responsibilty to the SELLER not the buyer (unless they are a dual agent).  If seller takes offer A which is lower for whatever reason, offer B has no rights to know anything about the terms of A's offer.  The listing agent then works on A's offer to get it approved (or has a 3rd party work on it - but that's a whole other debate) - If B feels slighted because they have a higher offer or upset and pushes the listing agent to submit their offer and the listing agent does, guess what?  They have JUST BREACHED their fiduciary responsibility with the seller.  Let's say the first offer was 3/4's of the way through the process, and there is an auction set, and the submission of the 2nd higher offer, resets the clock back to zero and now the listing agent can't stop the impending auction the SELLER can SUE the listing agent for tortious interference of the first contract.  OH and guess what, the A buyer can ALSO sue for interference of the contract

 

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Permalink Reply by Smitty on September 1, 2011 at 8:55am

Richard, Short sales are the same as regular sales only the lender approves the price and terms.  In a regular sale, not all parties see all things either.  If there are two buyers, neither knows what the other is bidding.  They will only know what the home sold for once it closes.

 

I have NO idea where you got the impression I condone illegal activity or "under the table transactions" -  Just because a buyer and seller know each other does not mean there were the 3F's in any manner.  Arms length transactions are there to protect the lender.  I have NO issue with them, but again, my job isn't to protect the lender.  It's to protect my seller.

 

BELIEVE me I would like to know what the lender's internal moves are.  I'd LOVE to see what's going on behind the scenes, but that's just not how it works.  The best you can hope for is a good communicator in whomever negotiates the sale. 

 

I just read about software yesterday that eliminates agents entirely from short sales, so you may get your wish sooner than you think.. Once the lenders sell direct to the buyers, there is no need for the agents any longer.  I don't like the fact it's coming, but lenders are so damn paranoid they aren't getting every penny they deserve that they are taking extreme measures.

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Permalink Reply by Richard on September 1, 2011 at 9:09am

Smitty,

 

1st, I want to apologize if I came across as indicating you condoned illegal activity.  From the short time I've known you here I'm positive that is not you for sure.  I hope that you can accept my apology.  I was refering the lending industry as a whole has tried to set up measures to protect against "under the table transactions". 

 

Anyway, I will be starting another hot post when I return to the office and hope that you veterans can weigh in on it.  The post will be of personal experiences witnessed here in the last two months.  Believe me, I'm taking in a lot.  And, I'm thankful for it.

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Permalink Reply by Smitty on September 1, 2011 at 9:11am

@MSI - I think Jeff, Harry and I have clearly stated we don't condone fraud or any illegal activity.  The law is what the law is MSI and as much as you may have feel slighted in some way, if a property is under contract with a lower offer already, and someone wants to submit a higher offer, the higher offer goes to back up position.  Now if the higher offer was signed first and the lower offer was THEN signed and submitted to the lender, that's clearly fraud and proven already in a court of law.

 

Exactly what are you having a problem with at this point?

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Permalink Reply by Smitty on September 1, 2011 at 9:13am

All's forgiven Richard...LOL...I don't think I have any debate left in me at this point.  I hope your post isn't related to the 3F's. 

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Permalink Reply by Tara Nagelhout on September 1, 2011 at 2:28pm

I have called Wells Fargo to report blatant fraud.  They asked me if I had authorization on file to speak with them on the account.  WTH?

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Permalink Reply by Tara Nagelhout on September 1, 2011 at 2:36pm

While I am totally against flopping, the complaint made by the buyer's agent has nothing to do with flopping.  That is, unless, the buyers are going to be reselling it.  Was something funky going on?  Sounds like it, but it wasn't flopping.

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