Question - Can a real estate agent BUYING an FHA short sale property (Seller has an FHA Loan that is being shorted), get paid a commission?


I have been doing short sales for more than 8 years now for agents all over the country and EVERY time a Servicer has known the Buyer is an agent and is expecting a commission, the commission gets denied...always has in the past.

 

I have a "situation" in Virginia where one closing attorney says his client CAN get paid when he buys a short sale property for himself.

OF NOTE - This attorney does about 5 closings per month for this agent/Investor.

 

 

The agent that is buying a short sale for himself is using an LLC on the sales contract.  His buying and having the LLC has NOT been disclosed to the bank and he is demanding to get paid his 3% commission.

 

I have tried reaching out to:

The Servicer (keeping the name off here for now) - was only read the FHA guidelines, which are of course filled with "legalise" that seemed to go either way.

 

Called HUD - 800-CALL-FHA - told me to call RESPA

 

Called RESPA - 855-411-2372 - they said they could not tell me and said to try NAR

 

Called NAR – 800-874-6500 and they said they can not give out "legal advice"?

 

Any help or feedback is GREATLY appreciated.

 

 

Again, ANY help, thoughts, guidance or feedback is welcomed and appreciated (and can be directed straight to me at [email protected] if you have any "lengthy or legal" advice on this you wish to keep private.

 

Thanks again....all my best to everyone.

 

Ben Benita

 

 

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with your permission, I will be using the:

"they get paid to litigate not mitigate"

line in the future!!!!

I was doing my best to avoid getting into with this guy, but he was hell bent on the agent getting paid.

I was SHOCKED when i went up the food chain at Sunturst (yeah I am putting it out there), spoke to higher ups at HUD, RESPA, NAR and even the local HUD office....all non-committal about the guy getting his commission?

I have checked on various other web sites and they are all filled with "legal-speak".....will let everyone know if I get any type of confirmation.

 

Obviously he's got some arms length/fraud issues.
I do not know about FHA. I did read a Freddie bulletin recently that specifically Allowed an agent collecting a commission, as a buyer.

"I did read a Freddie bulletin recently that specifically Allowed an agent collecting a commission, as a buyer." - I would love to see that.

[email protected]

Kevin, I thought it was strange too.  I'll look for it, I think it was one of those B of A updates.

FHA PFS Arm's Length Info -

The sale must be an “arm’s length” transaction; the buyer
cannot be a member of your family, business associate, or other
favored party.

and 

Arms-Length Transaction - Borrowers and Lenders must adhere to ethical standards of conduct in their dealings with all parties involved in a Preforeclosure Sale transaction. The Preforeclosure must be between two unrelated parties and be characterized by a selling price and other conditions that would prevail in a typical real estate sales transaction.

Max commission is 6%, servicer is to follow state law on how commission can or cannot be paid.

 

Source: 

Matt Martin

 

Program Director, Loss Mitigation

I had BB&T pay a disclosed agent/buyer a commission.

I have had one in the past that paid an agent/buyer under an LLC a commission too, but that was years ago and there were other partners in the LLC.

Ben BOA just published some guidelines stating if a buyer was a licensed agent representing themselves they CAN get a commission.  They didn't differentiate if it was or wasn't FHA but I've seen it handled both ways.  I've seen servicers deny it and then of course BOA now publishes the agent can get a commission
https://agentresources.bankofamerica.com/ss_news_12DEC04

Connection

Commission Paid?

Buyer (Including Individuals Representing Entity Buyer)

Representing self with valid license

Yes

I believe this just applies to BOA own portfolio and/or non-GSE, VA and FHA Loans.

Wells Fargo DOES NOT ALLOW the buyer to be paid a commission as agent on their own short sale purchase transaction.

This may be a servicer/lender internal policy more than other party rule or guideline.

It may be legal (allowable) by individual state laws however that probably doesn't mean any servicer/lender/investor has to accomdate that.

Why should he get a commission. There is no Agency.  He is a principle  And you;re saying that you are not disclosing his LLC relationship to the bank. That's trouble

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