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.
Replies to This Discussion
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Permalink Reply by Imran Mohamed on
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Hello kristin,
This is totally contrary to what Bob Hora and David Sunlin, two Senior VP's at BOA for Short Sale, DIL, etc are saying. In fact they are advocating for more power to the Agents. I suggest you escalate if need be.
Imran
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Permalink Reply by Sean Underwood on
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I understand the policy for one good reason only..... Recently I found out that a Short Sale listing Realtor (to remain anonymous for now) was using a Short Sale service company (similar to Kristen Johnsen, but will remain anonymous for now). The home was great, and my Buyers made a solid offer with great terms on the home. After submitting the offer, and having it signed by ALL parties, the property was placed in "Contingency" status. My Buyers agreed to perform their inspection upfront, and waived that contingency after accepting the condition of the home. The Buyers placed a solid deposit, and offered 90 days for a Short Sale Approval deadline. After about 5 weeks into the transaction, the Buyer's offer was supposedly denied by the Seller's Lender. Well, when my buyer's solid offer did not work out, and I was curious as to why such an offer would be rejected. It was a very solid offer. So, I spoke to the listing agent, and I got no real answer. Things just weren't adding up. I have completed over 150 Short Sales in my career, and something didn't smell right. In fact, the listing Realtor and Short Sale service company had not given me a copy of the preliminary HUD during the transaction. I had asked multiple times, and they kept "forgetting". This threw a red flag once my Buyer's offer was denied. So I decided to do some research on this anonymous Short Sale service company. That's when I learned the truth!!!! Unfortunately, the listing Realtor had made a written agreement with the Short Sale service company pertaining to a required service fee. The agreement stated that "in the event the Seller's Lender rejected the payment of the required service fee to the Short Sale service company, the required service fee would be the sole responsibility of the listing Realtor". Learning about this made the hair in my nose burn off from the raging fire that was brewing in my head. I learned of the "agreement" through someone else that had used the exact same Short Sale service company and had actually seen the agreement. My attorney and I feel that the collusion created in this "agreement" caused the listing Realtor to not allow my Buyer's solid offer go through. I'm confident in saying that the Seller's Lender rejected the service fees on the preliminary HUD, and the listing Realtor became responsible. I am sure that the listing Realtor refused to pay the service fees (I would). So, my theory is that this service fee issue caused my Buyer's offer to be rejected. However, I am confident that the Buyer's offer was not rejected by the Seller's Lender, but instead, by the Short Sale service company that could not obtain their service fees. Such collusion can ruin solid deals and waste time for all venues, including the bank involved. Hope this helps give good reason to why Bank of America might not want to deal with unlicensed service companies. We all have to get paid, including such service companies. However, in the event that such payment becomes an interruption in a deal, such a service should not be allowed.
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Permalink Reply by Paul Francis - Vegas Short Sales on
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Excellent... I've come across this also and then my buyer was asked to pay for the "Expert Short Sale Negotiation" service...
Yeah... whatever.
If the listing agent is too lazy to do the short sale themselves (because they are too busy running around looking for more short sale listings) then they...... or their seller should pay the fee.
No offense to any of the third party short sale services out there... but my experiences with them (title companies, etc..) when I've been on the buyers side of the deal has been horrendous. We've got a couple of title companies out here in Vegas really stinking it up... because they are handling FAR too many short sale files. I personally put more blame on the listing agents taking them on in the first place who don't know jack about what it really takes to doing a short sale... but they take them on because their Title Company will do "all the work for them" and they can concentrate on getting more "business"...
Equivalent to the negotiators for the banks handling 200 to 300 files...
Ok... my rant is over... LOL!
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Permalink Reply by Smitty on
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This doesn't make sense:"I'm confident in saying that the Seller's Lender rejected the service fees on the preliminary HUD, and the listing Realtor became responsible. I am sure that the listing Realtor refused to pay the service fees (I would). So, my theory is that this service fee issue caused my Buyer's offer to be rejected. However, I am confident that the Buyer's offer was not rejected by the Seller's Lender, but instead, by the Short Sale service company that could not obtain their service fees."
If your buyer's offer amount was enough to cover the servicers NET, an added "fee" would not make them reject the sale. They would simply say, "Take that fee off the HUD" - now if your sale was actually APPROVED and the list broker caused the sale to end because they didn't want to take the hit, then you have a heck of a case, but I would make sure before you start throwing around those allegations as they are VERY serious. It seems to me this issue has more to do with the list broker than 3rd party.
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Hi Smitty.
I'm VERY aware how serious this issue could be, and that is why I am being very vague and non-specific about the facts. However, I'm sorry you didn't catch it, but my statement does make sense. As noted in my previous statement, "My attorney and I feel that the collusion created in this "agreement" caused the listing Realtor to not allow my Buyer's solid offer go through.".... This means I am gathering evidence with an attorney for a civil action at this time. As are the Buyers with their attorney.
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Sean, either the offer went through or it didn't. If the offer was approved by the lender, then you DO have a serious problem. My only point is the fee on the HUD wasn't the likely reason it was denied IF it was denied. Lenders will just say take that fee off the HUD. If you can prove that your client's offer was approved and the listing agent decided not to move forward because they had to pay the 3rd party, you have an unbelievable case.
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Permalink Reply by Jeff Payne on
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Smitty, I actually have first hand experience in this situation. Our buyer made an offer on a property that was not one of our listings. After months of trying to get some answers, we learned that the delay was the 3rd party holding out for their fee and the listing agent refusing to pay it also. Learned the hard way, we got an email and the listing agent did not delete the previous emails. 3rd party fees were rejected on the HUD and they asked the listing agent to pay them, listing agent refused unti I got involved. When I got the chain of emails, I found out that the 3rd party would not close the deal unless the listing agent paid their fees that the lender denied. In the end, we got it closed and the 3rd party did not get paid. This was certainly more 3rd party issue than the list agent. Third party advertises their services as no fee to the agents or to the seller, the lender pays their fees.
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This is completely irresponsible on the 3rd parties part. Either you know how to get paid or you don't. I think what Sean is saying though is the 3rd party in his case had a contract with the listing agent that if the lender didn't pay their fee, the list agent would. Now if that is your CONTRACT and your AGREEMENT then as a list agent pay it and shut up. Now in your case if the 3rd party DIDN'T have a back up plan, then IMO they need to eat it. Sorry guys, that goes for all of us. I'm NOT going to hold up a sale because some lender didn't pay my 6% fee. I think there are serious grounds for lawsuits if this is the way people are doing business.
In Sean's case, I think the homeowner and buyer both have a serious case against the list agent. If he had a contract with the 3rd party. See this is why I don't understand WHY AGENTS are hiring 3rd parties. This is up to the homeowner, not the agent. I understand from this thread Thom gets hired by other agents and I'm just surprised by that. I'm a 3rd party and I am hired by the homeowners ONLY.
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Permalink Reply by Natalie Arndt on
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Smitty,
Please clarify what paperwork do you sign with homeowners and who you are paid by?
How do homeowners find out who you are?
Natalie Arndt BS MA CDPE
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Natalie, I have a long contract I sign with the homeowners, with multiple disclosures about the process, outcomes, roles we each play, need for them to hire an attorney or accountant for information beyond my scope of work, tax ramifications, possibility of cash at closing/note, etc.
Homeowners find me the same way they find anyone. I advertise. We are a listing brokerage that is also has a 3rd party mitigation company. We do have Realtors that refer to us however we NEVER EVER are hired by a Realtor. We are only hired by homeowners. An agent may call us and ask us to meet with a homeowner, or do a conference call, but ultimately it's the homeowner's decision on whether or not to work with us...NOT the Realtor. We also provide our listings to Realtors that aren't affiliated with our company. It's up to the homeowner to either provide their own Realtor or we can suggest one that THEY HIRE. It's not up to us to hire a Realtor. We can make recommendations based on past history, but again, it's up to the homeowner to decide.
Our fees are either paid by the servicer (investor)...i.e., Fannie Mae always pays out, or by the buyer as fully disclosed in every single listing.
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Smitty in my area, the listing agents that use 3rd parties always engage the third party and not the homeowner. I have taken a TON of expired short sale listings and when go to an expired appointment, we always analyze why their home did not sell. Many, and by many I guess 80% or more, had no idea that a 3rd party was going to be working the short sale, they all assumed the listing agent was going to work the short sale. Leads me to believe the listing agents are engaging the third party and not the seller. Most of the sellers actually believe the listing agent handles the entire process when in reality the listing agent either uses a 3rd party and the 3rd party negotiates their own fee or they ask the buyer to pay and again the seller claims no knowledge of it. Each area is probably different but in my area, alot of agents have their toes in the sand more than they work.
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Well I think this is part of the problem. When a homeowner has NO idea someone else is working on their file it's no wonder these files never get approved. I never realized that that's how companies even operated. I find the list agent completely irresponsible in that situation too. I can't even fathom a list agent doesn't disclose this to the homeowner. The only way that I can see a 3rd party working is if the HOMEOWNER hires them...they don't work for the list agent, they work for the homeowner. The legality of what you wrote Jeff is SCARY!
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