Bank of America's policy on allowing third-party negotiators to work short sales

I am a third party negotiator that the agents and homeowners select to assist with the short sale process. For a year I have been negotiating with lenders through the Equator system, this past week I was told that I was not an agent or attorney and that I was not allowed to be working on the short sales. Has anyone else encountered this? Also how is Bank of America able to tell the homeowner whom they can have negotiate the short sale for them as long as I abide my our state laws (which I am). Most agents don't want to spend the extra time it takes to get a short sale approved and closed and that is why they come to me. I had 4 BofA short sales that have been being worked on for 3 months get denied and closed due to me not being an agent. I think that if the government investors were aware of this issue they would not be ok with it.

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Permalink Reply by Jeff Payne on November 21, 2011 at 5:35am

Smitty, It is very common I know in Florida and I believe in Arizona also based on what friends tell me out there.  This is why the lenders constantly change their guidelines and have issues with percieved fraud.  The legality of it is very scary but keep in mind that the homeowner is very unsuspecting and does not know any better.  Welcome to my world.

Permalink Reply by Thom Colby CA Brkr 888-391-5245 on November 20, 2011 at 3:02am

Folks -

 

I think there may be a couple of things going on here and maybe some mis-communication or mis-understanding.

 

First, I believe Bank of America (and most other lenders) will NOT pay a 3rd party negotiation fee - or for that matter ANY negotiation fees.  I think some agents are inserting an attorney into the mix as a negotiator because lenders may pay attorney fees.

Second, (this one will sound repetitive for those who have read my posts in the past) if a Listing agent / Broker engages the services of a 3rd party negotiator my belief is they should pay the fee from their side of the commission,  They engaged the negotiator because they wanted to - they should pay for it - no question.

 

A good portion of my business for the past 5+ years has been short sale negotiation services for other brokers and agents.  Those agents & brokers recognize they do not have the capacity, capability, or patience to negotiate with the lenders so they turn it over to me just like having a sign company install signs for a fee.  In my written Agreement, which is required in CA, everyone signs the Agreement - the Seller, the Listing Agent, the Listing Agent's BROKER, the Buyer, Buyer's Agent and Buyer's agent's BROKER - and of course me.  The Agreement clearly outlines that I work for the Listing Agent / Broker and the Seller and my fee comes ONLY from the Listing side of the commission.  It discloses a number of other aspects such as Disclsoure of Agency between the 3 Brokers (List, Sell, Negotiator) along with a number of other items.

 

The point I'm making is that I have not had any issues with ANY lender when acting as a 3rd party.  The lenders will not pay for any such fees (as they shouldn't) but they enjoy having the benefit fo an experienced short sale negotiator who is knowlegable in their processes.

 

So I think the mis-communication / mis-understanding may be that the lenders are kicking out the FEE, and not rejecting the 3rd party negotiator.

 

Best of luck,


Thom Colby

Broker / Negotiator

Newport Beach and Palm Desert CA

 

 

 

Permalink Reply by Sean Underwood on November 20, 2011 at 4:04am

Hi Thom.

I don't feel that the lenders are targeting service companies like yours. You state here that you are a Broker, so the original issue at hand does not apply to you. The original issue applies to only those without a agent/broker license that are servicing short sales. I agree with you that this is a fee issue. The unfortunate part is that not all service companies are asking for their fees to be paid properly. Many are asking for their fees to be paid in ways that cause unprofessional collusion within the transaction. Such as the story I posted earlier. Therefore, Bank of America has set a policy that stops such incidents from occurring. Like HOA's that don't allow pickup trucks..... The HOA can't discriminate that your pickup truck is better than the neighbors, so the HOA reserves the right to eliminate pickup trucks entirely. There are MANY agents that don't have the skill that some of the servicing companies have. We have all run into the morons of this Short Sale era. However, Bank of America does not know the good apples from the idiots, so they set the policy in play. Being a licensed agent/broker will keep you in the clear (at least from info derived in reading these posts).

I want everyone to make $$$ and help people in the world through these hard times. It's unfortunate that some moron did something stupid and made Bank of America set such a policy.

Permalink Reply by Paul Francis - Vegas Short Sales on November 20, 2011 at 5:24am

@ Thom,

EXCELLENT....

Thumbs up on this...

Outsourcing work and then passing the fee on to the other side is NO WAY to handle business. I come across this so many times and I just want to vomit.

Permalink Reply by Smitty on November 20, 2011 at 5:10pm

Tom, Sorry, I don't mean to be all over your posts.  I find this thread fascinating.  Are you saying LISTING BROKERS hire YOU???  Why?  Why aren't homeowners hiring you?  I too am a 3rd party negotiator, but my contract is NOT with the list agent, it's with the homeowner as I work for them. 

In my opinion 3rd party negotiators should NOT be hired by a listing agent.  They work for the homeowners. 

 

Permalink Reply by Smitty on November 21, 2011 at 3:14am

Thom, it's not up to BOA to pay out negotiation fees to third parties.  The investors set those guidelines.  For instance Fannie Mae has guidelines on paying out to 3rd parties and that all "short sale processing" fees or negotiation fees must be treated as a seller concession.

Permalink Reply by Kimberley Kelly on November 20, 2011 at 3:25am

You sound legit, but here in California, we are rife with "short sale Negotiators" who don't know squat about negotiating a Short Sale!  They just saw a market niche and hopped in..never mind those of us with years of closed Short Sales under our belts.  I can see why any Lender would have this issue..

Permalink Reply by Thom Colby CA Brkr 888-391-5245 on November 20, 2011 at 3:44am

Kimberley -

 

Well, thanks I guess - I am "Legit" as you say and I am in California.  I've been Listing and Selling RE in CA and TX for some time and I didn't just hop-in to grab a niche and make a few bucks.  My primary focus is Listing property, helping people, and I NEVER double-end a transaction nor do I allow it in my brokerage - period, no discussion. 

 

I began doing short sales in 2005 and then in 2006 for other brokers and agents when a couple of agents came to me because they didn't know what they were doing and their clients needed help.

For me, it is rewarding to help sellers move forward with their lives and now it makes up a good portion of my practice - but - it's all about helping the homeowner get through a situation that is emotionally debilitating at best.

 

I decide which Agents and Brokers I work with - right now I have about 10 that I work with.  If there is anything questionable about the transaction or the parties to it, I drop them like a rock.

 

Legit,

 

Thom Colby

Broker / Owner

Thom Colby Proeprties

Newport Beach and Palm Desert CA

Permalink Reply by Natalie Arndt on November 21, 2011 at 3:50am

Thom,

I appreciate your remarks but I believe some people need to get licensed in order to understand what you are trying to communicate. 

Natalie Arndt BS MA CDPE

Permalink Reply by Richard on November 20, 2011 at 7:27am

"here in California, we are rife with "short sale Negotiators" who don't know squat about negotiating a Short Sale!  They just saw a market niche and hopped in"

 

Are you sure you didn't run him out of state to your neighbor next door, it sure sounds like the one I had on my last transaction. :)

 

 

Permalink Reply by Jim McCormack on November 20, 2011 at 4:47am

I think that Bank of America is doing this to cut out short sale flippers who typically use 3rd party non-licensed negotiators.  This is consistent with a long line of actions by BofA and other large banks.  Regarding requiring a real estate license to do short sales, I don't agree with that as long as the property is listed with a licensed agent.  I have been in real estate for almost 13 years, have been personally involved in over 300 transactions including 40+ short sales.  I have spoken with licensed real estate agents who are not even qualified to sell pencils, let alone real estate.  There should be an apprentice license for short sales where a person cannot even list one unless they have assisted with at least 10 or something.

Permalink Reply by Sean Underwood on November 20, 2011 at 4:56am

AGREED!!!! Great idea!!!

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