Servicers wanting payment of a Short Sale fee
Lately, I've run into two servicers asking for Sellers or Buyers to pay them a Short Sale processing fee, management fee or whatever they choose to call it. A 1% fee seems to be the magical number. Is anyone else seeing an increase in this? It doesn't seem legal...do you know?
Replies to This Discussion
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Permalink Reply by Susan Stuth on
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I'm seeing this alot more. Lawyers offices, servicers, etc...all wanting a piece of the pie. I am in St Louis where the avg sale is around 150K. When I have questioned some of the "companies" as to how the seller would pay for this, they usually tell me that the listing agent usually pays for it. In my market, we are doing short sales as low at 30K on occasion. First the banks want to pay only 5% and then these services want 1%. Its just getting ridiculous.
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Permalink Reply by Lynn Pineda on
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Hi Susan, I know it is ridiculous and it can't be legal. As Realtors, we cannot charge a Short Sale processing fee. It seems to be another way in which Sellers and Buyers are getting a raw deal.
Susan Stuth said:I'm seeing this alot more. Lawyers offices, servicers, etc...all wanting a piece of the pie. I am in St Louis where the avg sale is around 150K. When I have questioned some of the "companies" as to how the seller would pay for this, they usually tell me that the listing agent usually pays for it. In my market, we are doing short sales as low at 30K on occasion. First the banks want to pay only 5% and then these services want 1%. Its just getting ridiculous.
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Permalink Reply by Bryant Tutas on
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We actually can charge a short sale processing fee if we charge it at time of listing.
I haven't had a servicer hit me up yet. If they can put it on the HUD and take it from the deal then I'm OK with it. I personally won't be paying them anything.
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Hi Bryant, I thought that effective in Jan that you could only charge a fee for short sale processing if you were a Mortage Broker/Lender....No?
I haven't had a servicer ask me to share in the fee, thank goodness, but I've seen it appear on the Seller side of HUD and I've seen it requested of the Buyer in one of my Short Sales yet they did waive it for my sale.
Bryant Tutas said:We actually can charge a short sale processing fee if we charge it at time of listing.
I haven't had a servicer hit me up yet. If they can put it on the HUD and take it from the deal then I'm OK with it. I personally won't be paying them anything.
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Lynn, We can charge an upfront fee as long as it is for services rendered. Mine is a marketing fee. Look at it this way...a short sale seller is certainly free to hire an MLS only company of they choose to...right? Or they can hire a flat fee company. My business model just incorporates a flat fee and a commission. BUT be sure to seek legal advice on this and make sure you have the proper disclosures signed by the seller.
I have short sales in my market that are selling for $30,000 and less. I can't help these folks unless they pay me additional compensation. If it weren't a short sale I could just charge a higher percentage but unfortunately the lenders cap me in this area so I have to be creative. Make sense?
The law passed last year is to protect sellers from scammers that charge them upfront fees with a guarantee of getting the short sale or loan mod approved.
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Hi Bryant, how you describe your fees does make sense as I see you don't actually call them "short sale processing fees" as what I was referring to. I too have a lot of the low end price ranges in my market and I like what you do as we can't go over a certain percentage as Lenders only agree to pay a certain percentage. You gave me something to think about. How do you collect this fee? If you put it on the HUD Lenders wouldn't likely approve it, I'd think
Bryant Tutas said:Lynn, We can charge an upfront fee as long as it is for services rendered. Mine is a marketing fee. Look at it this way...a short sale seller is certainly free to hire an MLS only company of they choose to...right? Or they can hire a flat fee company. My business model just incorporates a flat fee and a commission. BUT be sure to seek legal advice on this and make sure you have the proper disclosures signed by the seller.
I have short sales in my market that are selling for $30,000 and less. I can't help these folks unless they pay me additional compensation. If it weren't a short sale I could just charge a higher percentage but unfortunately the lenders cap me in this area so I have to be creative. Make sense?
The law passed last year is to protect sellers from scammers that charge them upfront fees with a guarantee of getting the short sale or loan mod approved.
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Lynne. I collect it up front at time of listing. Send me an email to [email protected]
It also helps me determine who is serious about going through the process. When I received the entire short sale package completed and with a check attached I'm ready to go to work.
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Permalink Reply by Steve Londeau on
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Lawyers, Third Party Negotiators, even Realtors CAN charge a short sale processing fee. It is NOT a RESPA violation, because it is a charge that a service was actually provided. In the inital post, it appears that Lynne was talking about servicers, as in loan servicers. Why wouldn't a lawyer or negotiator charge a fee or be entitled to one?? You are providing a service and being paid for it, correct?
Every state has its own laws, rules, etc regarding what you can and can't do.
We are in Michigan, we do not have to be a licensed anything to negotiate short sales. We, however, do NOT charge a fee for our service, however, we do not negotiate for other buyers. Simply put, we are the buyers, and we negotiate the deal with the lender. We get paid by re-selling the property.
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Hi Steve, Yes, in my initial post I was talking of Loan servicers charge a Short Sale processing fee when another party, such as a Realtor negotiated the short sale. They were charging it simply because it's a Short Sale.
Yet, I'm under the understanding that I cannot charge a fee and call it a "Short Sale processing fee" and that only Mortgage Brokers/Lender can. I can charge such a fee and call it something else however. I need to look and find the actual statute where that is defined here in Florida. Perhaps if anyone else can verify such would be great. There seems to be conflicting info circulating.
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Permalink Reply by Emily S. Knell on
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This is not bank servicers asking for this 1% fee. This is the listing agent who's hiring a short sale negotiator who tries to get a 1% fee included in their HUD as a "negotiation fee", because most banks will not agree to this, that cost gets lopped off onto the buyer. Unfortunately if there is a demand for a particular neighborhood, some buyer will pay for it, otherwise, I would just tell the listing agent to pay for their own short sale negotiator from their own commission.
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No, in my experience this 1% fee is being requested by servicers and has nothing to do with who is negotiating the Short Sale for the Seller
Emily S. Knell said:This is not bank servicers asking for this 1% fee. This is the listing agent who's hiring a short sale negotiator who tries to get a 1% fee included in their HUD as a "negotiation fee", because most banks will not agree to this, that cost gets lopped off onto the buyer. Unfortunately if there is a demand for a particular neighborhood, some buyer will pay for it, otherwise, I would just tell the listing agent to pay for their own short sale negotiator from their own commission.
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Which banks have you been experiencing this with? And, who do they expect to pay this cost? And, is this fee being asked from a 1st or 2nd lien holder or both?
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