I am an agent representing both buyer and seller (transac broker) in FL. The title company is in the process of submitting the short sale docs and has been told of a new requirement this morning.

Even though we have a legal, binding contract on the property, NS is requiring the seller to put the home on auction.com for 2 weeks before they will consider a short sale. If the seller does not comply, we are told his only option is foreclosure. We have been told that if there is an offer for less than the current contract amount, the current buyer is still in the winner's position. BUT if a new buyer offers MORE than the current contract amount, that offer will supersede.

How is this legal?!?! There is a binding contract on the property! (with a buyer whose family consists primarily of attorneys and law enforcement, I might add) There are so many things wrong with this I don't know where to start. For starters, the buyer could sue the seller for specific performance if the other buyer's offer was accepted. The original buyer is not even afforded an opportunity to meet or match a bid - unless they sign up to auction.com. Where do agents come into play & how are they compensated? To whom is the offer submitted - the seller or the lender? This whole thing REEKS of wrong and unethical.

Has anyone else heard of this? Who/where could this behavior/policy be reported? RESPA? Any suggestions are welcomed. I am awaiting receipt of the letter they require seller and agents to sign - will upload once I receive.

Much thanks!!

Kim

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Thank you! Very useful information

I have just had 2 Nationstar files referred for Auction.com.  One is a file we have been working on since the beginning of February.  We received a counter offer a week ago, and the Buyer is willing to meet it.  Then, 2 days ago, I was told it had been referred to Auction.com and we would have no choice about it.  The 2nd file was originally a BofA Coop short sale with a preapproved price.  Buyer lost his job and could no longer qualify for a loan.  We were able to immediately obtain a cash back-up offer which was re-submitted to BofA.  But BofA informed us the loan was scheduled for service-release to Nationstar and there would not be enough time to approve and close the new offer.  We were told that all short sale docs would be transferred to Nationstar and we could go from there.  We submitted everything in Equator to Nationstar -- very difficult file with a 2nd mortgage loan (approval only good thru 8/30/13 for current Buyer) and 5 junior judgment liens -- we got them all cleared).  Last Friday Nationstar says we have to do Auction ...  I am appealing through [email protected].  Wish me luck ...

Sounds like an interesting road ahead, I too have a listing, 2 loans, Nationstar, 1st, BofA second...After being submitted for 3 weeks, just sent an email stating Auction.com is part of their short sale process. The Auction.com rep is very persistent, he calls daily, and says we need to sign the contract within 48 hrs. My broker also says they are not part of the listing contract and can't dictate that we market through the auction process.

I explained the process with the seller, that the buyer would have to pay 5% premium as they call it, and if any bids come in higher our buyer pays, if no higher bids come in he wouldn't have to pay extra. The Seller doesn't want to jeopardize losing the current buyer either.  I am hesitant to join the auction process. I don't appreciate being pressured when we have a buyer in hand... I will check with our lawyer and get their feedback on Monday.

Thanks for your comments,

Joanne

Kim,

We currently have two files with NS, and have done many in the past. Overall I would characterize them as having been pretty benign and we have closed everything we have ever started with them, in Equator and out.  To date, neither of our current files are going the Auction route.  there are many concerns with this, and Ocwen has raised a similar process to an art form.  I have spoken with FAR Legal AND FAR Ethics on this specific requirement by these servicers that we agree to Auctions and all that that entails legally and ethically.  Suffice to say, FAR is familiar with it, and basically FAR Legal says (paraphrasing) they can do this.  So do we roll over and allow our contracts to be interfered with? Or hold out and potentially harm our customers?  How about the ethics of potentially allowing a Buyer to be sold down the river or strong armed into paying a Premium to keep the property after they need to bid to keep it?    We felt that we would be best served, and FAR ethics agreed, with providing all parties a disclosure identifying this possiblity.  But for the moment, beyond  the Legal and Ethical issues raised, either of which serious enough on its own to cause us to stop working with these companies, the bottom line  for us is this...after years of working this sector and developing a reputation with local agents as being good to work with, in other words, they don;t mind selling our short sales....in fact they are happy to see us on a Listing, how long do you think it would take for our reputation to do a 180 degree turnabout when Buyers agents begin to think of us as the agents who sell their buyers down the river?  Our brand and name are everything and we maintain it by being the the best Professionals that we can possibly be.    For that reason alone we are no longer going to take any more NS or OCWEN beyond what we already have in the pipeline.  We will work with them to close these files bu beyond that, we have seen enough.  We actually have no real beef with thier ability to do what they wish and in Ocwens case inparticular, they are Entrepenurial Innovation personified.  It is just not for us.  A look into the future at MSR's in general, to us anyway, portends more and more MRS's being moved from Banks to (offshore) NonBanks as Banks prepare to meet anticipated BASEL III standards and the industry feels the pressure on the razor slim margins from the CFPB.  IT is purely a business decision to us, things probably need to be litigated and surely more will be written as these models expand and evolve, but enough is enough. Legally uncomfortable, ethically dubious, damaging to our Brand, any of these is a deal breaker.  It is disappointing and frustrating, but it is still a relatively small segment of the market...... thats our 2 cents anyway.

Kim,

Sam Hague says it best. 

For several months now, I have not taken any Ocwen or Nationstar files.  Since I'm a CA Broker, I can list and sell as well as negotiate on behalf of other Brokers and Agents as a 3rd Party Negotiator.  Just yesterday, an agent whom I've done lots of short sales for in the past, contacted me about a Listing she was considering - both 1st and 2nd originally with Countrywide.  When I looked on MERS it was clear the 1st is Nationstar and the 2nd is BofA.  I let her know I was not interested in working on it and after we chatted she declined the listing.  (This would have been a $900,000 listing !)  It will be interesting to see what happens to the property since it is a 2nd home in a resort area.  My final transaction with Nationstar was in the same resort area.  In that transaction, the buyer met Nationstar's price (and more) but they foreclosed anyway.  The property was subsequently sold through A.com at significantly less than the cash offer we had in hand.

With no new NS / OCW files in process and none in the pipeline, I feel better than I have in years and I'm actually getting a lot more sleep!

Good luck !

Kim, I would love for this to be discussed if anyone has any insight. I have a NS coming up. Haven't had the problem yet, but I would appreciate being prepared for it.  Thanks!

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