This new ruling (16 CFR Part 322) came in under the regulatory framework of the FTC and very people or organizations seem to be aware of it. Please read the ruling. Footnote 126 directly refers to the NAR requesting an exemption for Realtors and the FTC denying such. IF YOU ARE NEGOTIATING A SHORT SALE, YOU MUST BE IN COMPLIANCE WITH THE RULE which is burdensome. I am presenting the first seminar today to a Realtor group and shall hopefully 1)make it out of the seminar alive, 2)provide a process for Realtor compliance so they can continue short sale negotiations. If not, who will handle the negotiations? (most attorneys are overburdened and not knowledgeable in the daily negotiation process).
WHERE WAS OUR REPRESENTATION TO INFORM US OF THIS NEW RULING? Just curious!
126: As a general matter, the Final Rule is notTags:
The key word is " negotiating"- "The commission is aware that real estate agents may perform these functions when properties are bought or sold through a short sale transaction, but does NOT consider these services to be MARS."
If the seller of a property negotiates directly with their lender, it is no different than any other transaction. As long as Realtors® does not negotiate on the behalf of other parties- it would seem that there is no consequence to them by the MARS ruling. O agree with BB on this one.
AstewartRealtor said:The key word is " negotiating"- "The commission is aware that real estate agents may perform these functions when properties are bought or sold through a short sale transaction, but does NOT consider these services to be MARS."
If the seller of a property negotiates directly with their lender, it is no different than any other transaction. As long as Realtors® does not negotiate on the behalf of other parties- it would seem that there is no consequence to them by the MARS ruling. O agree with BB on this one.
The sad thing is that there are individuals and companies that are already planning and implementing how to take advantage of the MARS rule against their competitors. I have already consulted with 3 broker/agents that want to be in complete compliance. As part of the discussion, they wanted information on how to make formal complaints with the State's AG office against broker/agents "not in compliance." My firm is in Scottsdale, AZ and we represent and help Realtors with their legal issues including short sale negotiations. We do not sue Realtors, we defend "us". However, I have already seen advertised 1 law firm that recently opened in the Valley and advertising for clients that have been harmed by Realtors/Brokers with short sales. There are more to come. I believe that pending litigation against Realtors that negotiated short sales where there was not a full release of liability EXPRESSLY STATED in the Settlement Agreement is becoming the next wave of litigation. Due to Agency Law, every broker is responsible for their agents' short sales and will be joined in any litigation. Our EO insurance will not cover the litigation as the insurance companies will argue that it was outside the scope of their policy. Due to the unique nature of real estate, it probably is not a class actionable litigation which will create thousands of lawsuits over short sales. I'd hate to be a broker right now with hundreds (+) agents that have been doing short sales over the last several years.
The FTC MARS Rule and noncompliance issues will certainly fuel the litigation further.
**I was a successful developer/builder prior to returning back to the practice of law. As my industry was "realigned" due to predatory lending practices that spiked the marketplace and subsequently wiped out most mid-sized developers/builders including my companies (I started my distressed property career with shutting down my construction/development companies with 22 communities including over 100 completed and nearly finished homes), I really miss the good old days!
Jim Schneider said:
Well apparently Trent is not going to see what he's missing. We should all read the entire ruling, I went through making tons of notes, and there is more to it than disclosure forms. There are disclosures that need to be added to advertising, prohibited behaviors and statements, required documentation that must accompany the banks acceptance of a short sale offer, and this applies whether you negotiate or refer it to someone that does.
Chapter 494 Opinion Letter regarding Florida's codification of the SAFE ACT. Florida real estate agents, also see below from the Florida Bureau of Financial Regulation which states:
If a real estate licensee, who has been asked by a client to list a house for sale, enters into dialogue with the client's lender to see if a short sale would be acceptable, would the licensee need to comply with the loan modification provisions under Section 494.00296, F.S., if the only compensation for the real estate licensee would be the commission on the sale?
Answer: The conversations between the real estate licensee and the lender appear to be ancillary to the services being provided by the real estate licensee in the sale of his client's property. As long as the only remuneration sought is the standard commission for the area on the sale of the property and no other fees are collected for the dialogue with the lender, the activity mentioned above does not appear to fall under the provisions of Section 494.00296, F.S.
Preemption, Wendy. Generally, the Feds win, probably everywhere, but in lending, the Feds/OCC win, in my experience.
eg, Prepayment penalties under national charters, affiliate sharing under FCRA. The Feds won, I believe.
Thanfully, we we have the ultimate wisdom residing in Congress, thinking every minute of every day about how to protect us.
But, let's have the attorneys weight in on this.
Preemption, Wendy. Generally, the Feds win, probably everywhere, but in lending, the Feds/OCC win, in my experience.
eg, Prepayment penalties under national charters, affiliate sharing under FCRA. The Feds won, I believe.
Thanfully, we we have the ultimate wisdom residing in Congress, thinking every minute of every day about how to protect us.
But, let's have the attorneys weight in on this.
Florida Association of Realtors attorneys state Florida Realtors are covered byChapter 494 Opinion Letter regarding Florida's codification of the SAFE ACT. Florida real estate agents, also see below from the Florida Bureau of Financial Regulation which states:
If a real estate licensee, who has been asked by a client to list a house for sale, enters into dialogue with the client's lender to see if a short sale would be acceptable, would the licensee need to comply with the loan modification provisions under Section 494.00296, F.S., if the only compensation for the real estate licensee would be the commission on the sale?
Answer: The conversations between the real estate licensee and the lender appear to be ancillary to the services being provided by the real estate licensee in the sale of his client's property. As long as the only remuneration sought is the standard commission for the area on the sale of the property and no other fees are collected for the dialogue with the lender, the activity mentioned above does not appear to fall under the provisions of Section 494.00296, F.S.
Guys,
Sorry, but when dealing with the FTC in past experiences along with diving into the initiation of the DNC Act, I can simply tell you that it's a matter of "are you doing the right thing"? Plain as that. If you are making a solid effort, providing service that is documented and can show systems and policies in place that aid you in providing the service that you are claiming to deliver up front; you are justified.
I'm pretty sure the FTC is not out to crucify those Realtors and agents truly out there providing a legit and valuable service. Not that i trust the government one bit, but more importantly they would realize how much backlash they would have if that started to happen.
Hey Todd,
I am a Realtor here in Phoenix and also, was in the beginnings of a career in home building just before everything went belly up. I am very happy, in retrospect, doing Real Estate and honestly, I am not looking forward to getting back into construction.
I have been trying to figure out a way to contact you regarding your Short Sale Negotiating Services. Can you contact me so I can get some information from you. (Process, cost, etc).
You can reach me at [email protected]
Thank you so much.
Sincerely,
Ken Cuellar
Todd J Sullivan J.D. said:
The sad thing is that there are individuals and companies that are already planning and implementing how to take advantage of the MARS rule against their competitors. I have already consulted with 3 broker/agents that want to be in complete compliance. As part of the discussion, they wanted information on how to make formal complaints with the State's AG office against broker/agents "not in compliance." My firm is in Scottsdale, AZ and we represent and help Realtors with their legal issues including short sale negotiations. We do not sue Realtors, we defend "us". However, I have already seen advertised 1 law firm that recently opened in the Valley and advertising for clients that have been harmed by Realtors/Brokers with short sales. There are more to come. I believe that pending litigation against Realtors that negotiated short sales where there was not a full release of liability EXPRESSLY STATED in the Settlement Agreement is becoming the next wave of litigation. Due to Agency Law, every broker is responsible for their agents' short sales and will be joined in any litigation. Our EO insurance will not cover the litigation as the insurance companies will argue that it was outside the scope of their policy. Due to the unique nature of real estate, it probably is not a class actionable litigation which will create thousands of lawsuits over short sales. I'd hate to be a broker right now with hundreds (+) agents that have been doing short sales over the last several years.
The FTC MARS Rule and noncompliance issues will certainly fuel the litigation further.
**I was a successful developer/builder prior to returning back to the practice of law. As my industry was "realigned" due to predatory lending practices that spiked the marketplace and subsequently wiped out most mid-sized developers/builders including my companies (I started my distressed property career with shutting down my construction/development companies with 22 communities including over 100 completed and nearly finished homes), I really miss the good old days!
Jim Schneider said:Well apparently Trent is not going to see what he's missing. We should all read the entire ruling, I went through making tons of notes, and there is more to it than disclosure forms. There are disclosures that need to be added to advertising, prohibited behaviors and statements, required documentation that must accompany the banks acceptance of a short sale offer, and this applies whether you negotiate or refer it to someone that does.
NAR finally issued a statement and a sample disclosure, mind you the disclosure is only one of the neccessary disclosures, at a minimum, you would need to have a separate form at the time you present the bank's short sale acceptance terms.
NAR Opinion (you'll need to log in with your Realtor information)
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