Wells New Short Sale Affidavit-Has Anyone Ran Into It Yet?
Short Sale Affidavit
As relates to a certain real estate purchase contract dated _____/_____/_____ concerning the
following Mortgaged Premises;
Property address: ______________________________
______________________________
under which the existing Lender(s) has agreed to accept less than full payoff of the debt owed
in exchange for release of the Mortgaged Premises (a short sale), each of the signatories
hereto hereby certify and affirm under penalty of perjury, that to the best of their knowledge
and belief;
(a) The sale of the Mortgaged Premises is an "arm's length" transaction, between the
parties who are unrelated and unaffiliated by family, marriage, or commercial enterprise;
(b) There are no agreements, understandings or contracts between the parties that the
Seller will remain in the Mortgaged Premises as a tenant or later obtain title or
ownership of the Mortgaged Premises,;
(c) Neither the Borrower(s) nor the purchaser(s) will receive any funds or commissions from
the sale of the Mortgaged Premises, except as allowed by the short sale approval letter
(if applicable);
(d) There are no agreements, understandings or contracts relating to the current sale or
subsequent sale of the Mortgaged Premises that have not been disclosed to the Lender;
(e) None of the signatories will receive any proceeds or other remuneration from this
transaction except as set forth on the Settlement Statement; and
(f) None of the signatories have knowledge of any offer to purchase the Mortgaged
Premises for a higher purchase price than the purchase price contained in the certain
real estate purchase contract referenced above that has not been presented to the
Lender(s).
Buyer(s) further certify and affirm under penalty of perjury, that;
(g) the property will not be sold within 90 days of the closing date of the subject real estate
purchase contract; and
(h) the property will not be rented to the Seller after the closing of the subject real estate
purchase contract.
Each signatory also understands, agrees and intends that the Lender, any Investor (in
particular Freddie Mac if applicable), Insurer or Guarantor, of the subject Mortgage are relying
upon the statements made in the affidavit as consideration for the reduction of the payoff
amount of the Mortgage and agreement to the sale of the Mortgaged Premises and agrees to
indemnify the Lender, any Investor (in particular Freddie Mac, if applicable), Insurer or
Guarantor, of the subject Mortgage for any and all loss resulting from any negligent or
intentional misrepresentation made in the affidavit including, but not limited, to repayment of the
amount of the reduced payoff of the Mortgage. Each signatory further understands that a
misrepresentation may subject the responsible party to civil and/or criminal liability and agrees
that this certification will survive the closing of the transaction.
_____________________________ ______________________________
(Seller) Date (Seller) Date
_____________________________ ______________________________
Print Name Print Name
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_____________________________ ______________________________
(Seller’s Broker) Date (Buyer’s Broker) Date
____________________________ ______________________________
Print Name and Company Name Print Name and Company Name
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_____________________________ ______________________________
(Buyer) Date (Buyer) Date
_____________________________ ______________________________
Print Name Print Name
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_____________________________ ______________________________
(Settlement Agent) Date
_____________________________ ______________________________
Print Name and Company Name Print Name and Company Name
_____________________________ ______________________________
Print Company Address Print Company Address
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Note to Settlement Agent;
ALL SIGNATURES MUST BE ACKNOWLEDGED BEFORE A NOTARY PUBLIC AND
DOCUMENTARY EVIDENCE ATTACHED HERETO IN ACCORDANCE WITH THE
REQUIREMENTS OF YOUR STATE LAWS
(Transaction Facilitator, if any) DateReplies to This Discussion
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Permalink Reply by Kayte Gentry on
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OK Folks - I've read and re-read this addendum and more importantly, the attorney notes Rita uploaded. I may be standing alone on this one but it won’t be the first time and likely won’t be the last. I see and understand the points made and the concern about this addendum. I also understand that our attorney’s are paid to keep us out of harm’s way, legally speaking. However, I could take just about ANY legal document we use in AZ for short sales “off the deep end” with interpretation and my attorney would gladly cash my check to do so. Without detailing my thoughts on each and every point made by the kind folks at Nash Law Firm, suffice it to say that I can find reasonable accommodation or exception to every point noted. Now, I’m not saying that these aren’t valid points. THEY ARE! As a matter of fact, they’re VERY valid. Points in which I would be happy to have addressed and changed by the lender’s who are issuing these addendums. But, truth be told, they’re not listening to me, despite my best efforts. If any of you have better luck at getting them to change these addendums, please let me know and I’ll gladly join your bandwagon!
As a reasonable person and licensee, I go to great lengths to feel certain that there is no FRAUD involved in the transaction. Can I certify that? Of course not. But I also cannot certify that the home doesn’t have mold and the seller is hiding that fact from me. But yet, we list and sell homes where that is possible. We take the risk because we’ve done our due diligence and asked that the buyer do the same and that the seller represent the property honestly. How is this different in a short sale transaction?
So, the question remains…to sign, or not to sign? Certainly, it’s your decision (or your Broker’s really). I’ll honor your opinion and decision either way and ask you do the same. For me, I’m going to keep representing my clients in line with my fiduciary responsibility and doing what I can to make sure that short sales continue to get closed for honest buyers and sellers in need.
I promised my opinion, and you have it. I already know most of you want to argue with me right now and I’m letting you know in advance, I won’t debate this on an internet forum. (Over food…maybe!) Our states all have different laws and restrictions regarding our licenses. Our attorney’s and broker’s will all have opinions and direction for us. You follow yours, I’ll follow mine. If someone is successful in getting BofA or the investors to consider a revision of this or another addendum, please let me know and I’ll join the front line with you.
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Permalink Reply by Jeff Payne on
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Kayte, good stuff, I tend to follow your logic here and agree. Another member and I also discussed this and I think the attorney is being an attorney and doing what they are trained to do. The BofA addenda has no place for me to sign except for the realtor certification and I have no problem signing it. It does not make me a party to the contract any more than our Florida contract does. Bottom line is that if I know there is fraud I will report it because it is teh right thing to do
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Permalink Reply by Bryant Tutas on
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This is going out in the newsletter today
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Permalink Reply by Jim McCormack on
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I think the terms won't affect most of the short sales I handle as I am very careful to stay away from these types of issues anyway. However, short sale flippers are dead and so are the REALTORS handling their short sales. Also, even for very honest short sale listing agents this Addendum can create problems since clients frequently don't tell us what their real motivations and plans are. Therefore, it is very possible that the seller and buyer have agreed on terms outside of the contract that are prohibited by this Addendum and where never discussed with the listing or buyer REALTORS.
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Permalink Reply by Cody Lampariello on
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If any of my clients asked whether they should sign this I would advise them not to. I haven't seen it come through in any of the deals that we process though. I'll contest it when we do and see what happens.
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Permalink Reply by Christina Conrad on
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Thanks Darlene...this is what I am talking about....the lenders do need to be challenged and you are absolutely right...you are being asked to break the law..it is ridiculous...I think attorneys are getting a bad wrap on this one....this is just attorneys being over cautious..this document is crap and is asking us to break the law...it is trying to do away with short sales by punishing people that make a profit off of the same..we are all in this to make a profit..duh...I'm not going to go any further with my comment because I have very strong feelings about this matter..it will be one of those things that people will have to learn the hard way on unfortunately...
Darlene Root said:
As a Broker, I am not willing to sign anything that has this language in it (most notably paragraphs a, g and h) . I am not a party to the contract (nor is the lender for that matter) and I cannot make statements about what the seller or buyer will be doing with the property after the sale has been completed.
Paragraph (a) is asking the seller to discriminate. This parargraph clearly violates the Fair Housing laws by discriminating against Familial Status. When we represent the seller, we have fiduciary releationship and responsibility to guide them. We would never let them discriminate against anyone else. By telling them that it is ok to sign this is asking them to break the law. Since when is it o.k for someone to ask us to put our license in jepordy? These lenders need to realize that they are not a party to the contract; they only have a lien on the property because they have a mortgage.
I have sent this doc back without my signature and the offensive paragraphs redacted with a letter from out attorney stating that it is not in our best interest to acknowledge the doc. I have only had one deal fall apart as a result.
It is time for us to stop being "puppets" and start challenging the lenders about their practices. Most of the time we fear that we will loose a deal because we are challenging them. This is not true.
As far as "flipping" goes, there is nothing wrong with buying low and selling high; as long as there isnt mortgage fraud involved. I have been an investor for 30 years and work with several investors that "flip". Why is it that when a property that is purchased low and sold at a higher price considered fraud when stocks are sold that way all day long. As a matter of fact; if you purchase your t.v from Best Buy, didnt they just do the same thing? And, they didnt do anything to the t.v to increase the value. Actually, they didnt even buy the t.v....they got it on consignement. Talk about the ultimate "flip". Where is the fraud there?
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That is what we all need to do..,
Cody Lampariello said:If any of my clients asked whether they should sign this I would advise them not to. I haven't seen it come through in any of the deals that we process though. I'll contest it when we do and see what happens.
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I must be missing something, how would I be breaking the law by signing this affidavit? It looks to me to be a standard arms length transaction affidavit and if I knew of anything that would be violating the arms length affidavit like the seller renting back or selling to their brother, I would not sign it. Otherwise I really don't see any issues with it. If I do not know at the time of signing this that the buyer is going to flip it in 30 days, then I wouldnt have anything to worry about. If I did know, that would be a problem for me.
I read a comment about Fair Housing? Not sure but I believe that Wells Fargo is not discriminating, they are making sure that the transaction is not fraudulent, being sold to a family member as a non arms length transaction.
I fight the lenders constantly and choose to pick my battles, this would not be one of them for me.
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Permalink Reply by Beverly Cibulsky on -
Would someone shed some light on how Familial Status is related to a Short Sale (in particular Wells' Arms Lenght Affidavit?) I believe Familial Status discrimination is releavant to Rentals, and not discriminating against families with children. No the fact that people are related?
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Beverly that is what I thought also. Wells is not discriminating against someone because of their familial status, they just wont allow a family member to purchase the home due to an arms length transaction affidavit. I dont see where this form makes anyone party to the contract, it is used to make sure that the transaction is being handled at arms length. Agents sign REO contracts all of the time, how is this different?
Beverly Cibulsky said:Would someone shed some light on how Familial Status is related to a Short Sale (in particular Wells' Arms Lenght Affidavit?) I believe Familial Status discrimination is releavant to Rentals, and not discriminating against families with children. No the fact that people are related?
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Kimberly, I know that I am in the minority here but you are signing this form if you have no knowledge of, in this case, family members buying it, the seller maintaining occupancy, flipping etc. If you have no knowledge of this, why would you be worried about signing it? just curious? You can not attest to what the buyer and buuyers agnet have agreed upon, unless you have knowledge of it, in that case you should not sign this agreement.
Kimberly Sherrod said:Since I can not attest to what the buyer and the buyer's agent have agreed upon, or what the buyer's intention for the home, I have no desire to sign this document. We and the seller are going to be on the hook all the way around if we start signing these.
Kimberly
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Darlene, where in this document does this make you party to the contract? So what would you tell your seller if Wells refused to approve the final HUD without this document? "Sorry Mr Seller, I dont like this addendum and wont sign it, I guess you will have to face a foreclosure"
Paragraph A is referring to the buyer and seller not being related, nothing to do with you unless you know of the relationship between buyer and seller
Paragraph G disallows a flip, again nothing to do with you unless you know that the buyer is selling within 90 days.
Paragraph H disallows a seller rent back and has nothing to do with you unless you know the seller is renting back.
While I dont think the lenders should care about whether or not the buyer is going to resell the property, these addenda have evolved because of the underhandedness that some short sales have caused. If you are working in an honest and ethical way, signing this addendum will have zero affect on you. That is my non legal opinion.
Darlene Root said:As a Broker, I am not willing to sign anything that has this language in it (most notably paragraphs a, g and h) . I am not a party to the contract (nor is the lender for that matter) and I cannot make statements about what the seller or buyer will be doing with the property after the sale has been completed.
Paragraph (a) is asking the seller to discriminate. This parargraph clearly violates the Fair Housing laws by discriminating against Familial Status. When we represent the seller, we have fiduciary releationship and responsibility to guide them. We would never let them discriminate against anyone else. By telling them that it is ok to sign this is asking them to break the law. Since when is it o.k for someone to ask us to put our license in jepordy? These lenders need to realize that they are not a party to the contract; they only have a lien on the property because they have a mortgage.
I have sent this doc back without my signature and the offensive paragraphs redacted with a letter from out attorney stating that it is not in our best interest to acknowledge the doc. I have only had one deal fall apart as a result.
It is time for us to stop being "puppets" and start challenging the lenders about their practices. Most of the time we fear that we will loose a deal because we are challenging them. This is not true.
As far as "flipping" goes, there is nothing wrong with buying low and selling high; as long as there isnt mortgage fraud involved. I have been an investor for 30 years and work with several investors that "flip". Why is it that when a property that is purchased low and sold at a higher price considered fraud when stocks are sold that way all day long. As a matter of fact; if you purchase your t.v from Best Buy, didnt they just do the same thing? And, they didnt do anything to the t.v to increase the value. Actually, they didnt even buy the t.v....they got it on consignement. Talk about the ultimate "flip". Where is the fraud there?
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