I am working on a Bank of America co-op short sale (Fannie Mae) where the negotiator states that the maximum allowable settlement fee to the attorney is $750.00. Has anyone else faced this same limitation? If so, are there other allowable fees to the attorney under the co-op short sale program (e.g. "legal representation", "title review", "negotiation fees", etc)? Attorney is livid and feels that he has been undermined.
Any advice?
**********************************
like buttons
Replies
In an attorney state they will pay 1500
I have had 2 this week and was told it is a Bank of America guideline. We are not necessarily an attorney state but there is no escrow company in our area that will close a file, including performing a title search, for less than $1000.00. I escalated one file and got the total paid but don't want to escalate every file to get the closing fees and title search paid. Do you place the title search fee as a separate fee on the HUD? I have done this in the past and it would get rejected so it was suggested to place it as part of settlement fees which then makes the amount needed $1100.00 in our area.
We just closed an FHA loan - not coop and attorney got $1500, but I'm also in an attorney state and was able to document it. They wanted it off the HUD all together, but we showed them we couldn't do that and then the fee was allowed.
Was the attorney doing the negotiations? I have come across this and they are firm. Here is an excerpt from the FHA Short Sale Guidelines which the attorney should have a copy of:
Allowable Settlement Costs
– The term “Net Sale Proceeds” is defined as the sales
price minus closing/settlement costs (i.e., reasonable and customary costs per
jurisdiction that are deducted at settlement). Allowable settlement costs include:
1. Sales commission consistent with the prevailing rate but, not to exceed 6%;
2. Real estate taxes prorated to the date of closing;
3. Local/state transfer tax stamps and other closing costs customarily paid by the seller
including the seller’s costs for a title search and owner’s title insurance;
4. Consideration payable to seller of $750 or $1,000 (i.e., if such consideration is not
used to discharge junior liens);
5. Up to $2,500 to be used for the discharge of junior liens if closing occurs within 90
days. Within 90 days, the first $1,000 represents the mortgagor’s consideration and
the additional $1,500 represents FHA’s consideration for a total of $2,500. If
settlement occurs after 90 days, the first $750 represents the mortgagor’s
consideration and the additional $1,500 represents FHA’s consideration for a total of
$2,250;
6. Outstanding partial claim amount. This entire amount must be paid when
calculating the net sales proceeds. The seller, buyer, or other interested party may
contribute the difference if the net sales proceeds’ amount falls below the allowable
threshold; and
7. Up to 1% of the buyer’s first mortgage amount if the sale includes FHA financing.
FHA-short-sale-reference-guide.pdf
huddocallowablefees.pdf
I have this problem a lot in here in NY where we cannot do a transaction without an attorney. I usually have to reduce the title company pick up fee and explain without the attorney, there is no sale.
I closed BoA co-op SS last week in Long Island, NY. Sellers attorney got $1,500 (not sure if it was w Fannie Mae).
The co-op is very strict.. they only approve $750 for settlement fee..over here in MD we use title company and the attorney make their money from the title insurance...
In California, we use escrow companies instead of attorneys. The max is $750 as well.