Okay so after a great response and much appreciated opinions on my last post "Are WE now the problem" I am just arriving to the office after a phone call that prompted me to add this discussion.

I might get burned on this one as well but hey, this is what's needed and I'm dedicated.

I understand we may get some biased answers/opinions because this is heavily frequented by Realtors but let's see what spark we can create.

I had an appointment today for 10am for a seller who is delinquent, motivated and wanted to do a short sale. I have spooken to him now for two weeks. He has an FHA loan with BOA and has tried numerous times to get a modification (Unsuccessfully). This was actually given to me through my loss mit work directly from BOA and was told he has two options....1. PFS program (Short Sale) with relo money. 2. DIL

He understood and was ready. 9.30 on my way and a call comes in saying "I spoke with my ATTORNEY and he advises that he has a special program that will allow me to do a modification and I have to do what's best for my family."

Now, I'm going to stop here and see what responses come in but I want to add, I am all for OPTIONS, Foreclosure relief and my community. I am dedicated to spreading TRUTH and I want the best for PEOPLE.

This in NOW WAY is a bash against GREAT ATTORNEYS who are dedicated as well and who really want the BEST for clients however there seems to be a conflict and it's RUINING people.

Please share!!

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Hi Jayne,

I'm very curious about the pre-paid legal plan. Any info you can send would be much appreciated.  Thank you!

[email protected]

Hi Jayne,

 

It looks like you're proactive about this and are on top of it for all your clients.  I like the fact that you're giving your client options and you have a support network built into your practice on an as needed basis.  If I understand you correctly, you've partnered with a legal agencey.  I have a few questions,

  • Do you see this as a trend in your area only or as a new industry concept? 
  • How does most of you clients respond to this?
  • How receptive was the real estate attorneys to this concept and giving up a share of the market?
  • From just a ball park viewpoint, what percentage of your property demographics market use this....lower price homes, median price or luxury end homes? 
Yes, I am interested in your legal plan.  Also what state are you in?  Luckily in CA. we don't have to use attorneys for closings.  However there are many that are charging high fees for doing absolutely nothing.  Just to cover myself, I refer my potential sellers to a local attorney, before I take the listing.  Thank you!

I'll preface this by agreeing that yes, there are some great attorneys and yes, there are not so great ones who give their clients a false hope of a loan modification and charge the distressed homeowner legal fees. 

 

One of my short sale clients cancelled the listing because a lawyer convinced her that she was still a candidate for a loan modification. This was after the client had tried to get a loan modification with the help of NACA who kept the client in a limbo-loop for about a year with the false hope that a loan modification could be completed.  It was very evident by the client's non-work status and financial profile of non-payment on other accounts that a loan modification was going to be a big challenge.

 

To make a long story short...one year after the listing was cancelled, I was contact by the client's lawyer, the house was up for auction and I need to convince the client that a short sale is her only option before being foreclosed. At this point, even the lawyer was having trouble convincing the client that a loan modification was no longer possible and that now she should consider a short sale.

I re-listed the property, got an offer and completed the short sale.

I'm in!  The answer is, in some cases YES!  But let's not generalize too much here.  As a note -- all commentary that follows is my opinion based on experience.

 

I went to an expo recently and sat down at an attorney's roundtable.  After just a few moments, he said those fated words .... "I advocate forclosure in almost all circumstances."  I immediately took my business card back and made sure to tuck his safely away.  After a few moments of 'educational' lecture about how incredubly wrong I felt he was, I exited his presence.  Many agents approached me after to further discuss.  I then went back to my office and began to spread the word amongst fellow agents not in attendance.  Uh hello!!!  We educate ... You (clients) decide.  (my tag line)

 

In your circumstance, as in most circumstances, eucation is key and critical.  If BAC had already denied him, what can this 'attorney' do differently?  Are they even an attorney?  Are they a bankruptcy attorney looking for future business?  Is your homeowner protected from deficiency after the 'attorney' fails and they foreclose?  What has been offered to them in writing?  You know the drill ....

 

Here's what I would do.  1) offer to speak with this 'attorney' together so that you can get more information from him that might help you with this and other clients.  If the client agrees, you're in!  Now just ask the right questions -- how many successful transactions have you completed in this state? In this Metro area?  In this grid?  How long have you been an attorney?  WHAT PERCENTAGE OF YOUR BUSINESS IS FOCUSED ON BANKFRUPTY??? BAC denied -- what makes you different?  I'm betting the answers to your pointed questions will make the homeowner think twice.  Then refer your client for a 2nd opinion.  Make sure you give them three options for attorneys so you're covered.  But at the VERY least, get that client to a real attorney for a 2nd opinion.  Fast!

 

Then educate your clients with the statisics about mods and their long-term success rate.  I beleive in Airzona it's 1% and then 50% of those short sell or foreclose within 5 years (look it up and be the source of the source -- stats are eveywhere and easy to find).  I'd have to look it up myself, but that's a close approximation and good enough for this discussion.  This client is scared and wants to do the right thing for his family.  That's your open door.  Because if this 'attorney' is a scham as most 'attorneys' offering loan mods are, your client is likely getting sucked in by a scam that sounds too good to be true.  Also, if this 'attorney' is asking for ANY non-refundable money for this 'modification' it's a scam -- in my personal opinion of course.  And lastly!  Why is an attorney doing a loan mod?!?!?  Would you have a gynecologist do your brain surgery? Well why not??  They're both doctors!  Find out what this guys true specialty is, and then reveal that to your client!

 

The key to this and the last post is that short sales are not real estate.  This ain't your grandma's real estate folks.  Educate yourselves and then educate your clients.  If you aren't attending training at least once a month, consider turning your business to a referral business (again, my personal opinion).  Educate educate educate!!!

 

 

 

 

Living in CA where is it now illegal to charge up front for modification services or short sale services, I would insist that the homeowners get a list of people that the attorney has helped and call them to see what their experience is.  If the attorney is above-board, this shouldn't be an issue. 

 

We as a society tend to get from friends, relatives, and coworkers referrals and recommendations to doctors, dentists, mechanics, etc.  Yet we just blindly take on the first attorney that crosses our path.  They should be treated no differently.  As a Realtor®, I have spoken with the real estate attorneys in my town and have asked for references for loan modifications and short sales, which they have provided without hesitation.  I now feel I can make a better recommendation to my client who is in need of such services because I did my homework.

 

There will always be unscrupulous people out there (attorneys and non-attorneys alike).  However, with a little effort they can be found out so we can steer clear.

I'm amazed at how many homeowners fall into this trap of signing up with a attorney for a loan modification and paying for foreclosure defense services that they can get for free. The special program isn't offered by the attorney it's offered by the investor of the homeowners mortgage. But the home owner is led to belief the attorney has a special program. If the program is so special how about having the homeowner pay the attorney fee after the modification is approved? I can guarantee you that there aren't many foreclosure defense attorneys that will work on a homeowners behalf without a retainer fee.

 

There are GOOD ATTORNEYS. I happen to work with a few. 

If it's a "special program" then the Attorney should have no problem collecting a fee AFTER the results work in my opinion.

I agree that there are a few attorneys that are really helping and I am not for bashing them, especially the ones that are doing foreclosure defense while I get the short sale done on behalf of the seller.  Having said that, the first question that comes out of my mouth to my client is "how much is it going to cost and will he put in writing that if the modification is not satisfactory, he would refund every dime?"   If the answer is yes, then try it, otherwise it is just another scam! Especially if the claim they can promise to do the modification!.......guess I am not the only one working today!

 

David Reeve, Broker, CDPE,CIAS 

Our office is weary of companies and attorneys offering loan mods.  We have been approached by too many clients that have had bad experiences with their lender and or so called "specialists" or law firms specializing in the process to have much faith.  Not to mention, the instances where a modification of loan terms without principal balance reduction is doing nothing more than delaying the inevitable.  Should the homeowner's financial situation improve, it will only be that much more difficult to short sell the home later.

 

It is hard to suggest there isn't a conflict of interest for anyone who takes on a short sale without some type of up front fee retainer because the motivation to be paid for work in the end can outway the necessary precautions.  From ambiguous language in an approval letter, to accepting the first deal a homeowner might agree to, you can't blame someone for wanting to be compensated for all of the work involved in these transactions.  Not to mention, in our opinion, and in the opinion of many brokers in Minnesota, a short sale is far too legally charged for a real estate agent to handle without legal support.  The risks far outway the benefits.

 

That being said, it is definately hard to come by a law firm that will exceed expectations on difficult files.  Cherry picking and earning income on short sales as a numbers game will often be in direct conflict with what might be in the homeowners best interest.  What you need to do is to find is a smaller firm or an attorney with a staff that does not have to count hours like the big firms.  If you look at the number of hours put in on any one short sale, it is impossible for most law firms to truely compete because their hourly fees would blow the profitability of most short sales out of the water.

 

For perspective, our office charges an upfront $500.00 retainer to ensure the seller's cooperation.  If a seller can't afford a $500 retainer, it is a pretty good indicator that their financial situation is such that they would be better served by a bankrutpcy and remaining in the home until they can get back on their feet.  If a seller can afford to pay a retainer but is unwilling to do so, this is a pretty good indicator that the level of cooperation they will offer throughout the process will not be condusive to success.

 

Our office consists of 1 attorney, 1 manager, 1 processor, and 2 document collection specialists.  We have a very high level of success, and if we have one fault, it is that we don't know when to give up on a file.  I can tell you that you can't expect to get rich by processing short sales ethically, and real estate agents without the propper support network attempting to do this on their own are often adding to the problems we are all experiencing. (Thank goodness for the help and support of Short Sale Superstars)  Of course there are many agents that are able to spend the time and give the attention required to facilitate a successful short sale, but I think their time would be better served finding new homeowners in distress.  I have personally listened to loss mit specialists complain about the sloppy paperwork provided by realtors, complaints of unresponsive agents and lack of attention to details.  We have to continue to clean up the process from our side or banks will never be able to get these deals approved in less than the average 3 months we still experience today. 

 

My advise is to either build your own team to process short sale, makind sure that seller understands that you will not offer any type of legal advise, or interview attorneys that specialize in real property and bankruptcy law with a team to support the tedious process.  The agents that work with our office have time to network and get new clients, so those that have been working with us longer average 5-15 short sales in their pipeline at all times because they aren't tied down to their desk and tied up with constant lender contact, and short sale frustrations. 

 

Good luck!  Great topic!

The attorney should know that aa of January 1st 2011, they are not allowed to ask fir an up front retainer or a Short Sale Specialist they can be disciplined and or fined. The banks are also pushing the attorneys our as far as negotiating. They will not pay the attorney a fee. To be honest I had one experience with an attorney handling one of my short sales and they were very incompetant. Now the attorneys are trying to schmooze with the Realtors to try and get business from them seeing that the banks are dumping them now

I think the attorneys are still exempt for the problem about upfront fees.  Last time I checked this was the case.  Do you have some further information if my information is correct?

 

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