This post will serve to gather a list of all the states that require a real estate license to negotiate short sales.

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MN - Statute 82.55 subdivision 19

https://www.revisor.mn.gov/statutes/?id=82.55

HI Cameron. I'm going to blast this question out in out newsletter today to see if we get some good responses from all 50 States.

The New Jersey Real Estate Commission's position on REALTORS and short sales was issued in a memo dated October 29 2009.  It states that a REALTOR can negotiate a short sale if:

1.  The real estate licensee is acting in the course of providing brokerage services to a seller in
accordance with the terms of a previously executed listing agreement between the seller and the
licensee’s brokerage firm; and
2.  The real estate licensee receives no consideration other than payment from their broker for the
brokerage services specified in such a listing agreement.
 Real estate licensees who otherwise engage in  activity within the statutory definition of “debt
adjuster” without being licensed as such pursuant to the Act are subject to penalties as provided for in
N.J.S.A. 17:16G-8. 
 

The full link is:  http://www.state.nj.us/dobi/bulletins/blt09_35.pdf

The Texas Real Estate Commission and the Texas Department of Savings and Mortgage Loans have both put out guidance on this issue. Real estate licensees may negotiate short sales. Non-real estate licensees must be a licensed and active MLO. Lawyers may also work short sales without any additional licensing.

 

Tom

From top Georgia Attorney:

 

In recent years, short sales have made up a diportionately large number of all real estate transactions and probably will contimue to do so for some time.  However, there are important limits on how far a real estate agent can go in representing their seller when it comes to short-sales.  The most far-reaching limitation is imposed by the Georgia Residential Mortgage Act (the "Act") which was modified recently to comply with the Secure and Fair Enforcement for Mortgage Licensing Act (the "S.A.F.E. Act) which is a key component of the Housing and Economic Recovery Act of 2008 ("HERA").

Pursuant to the Act, "it shall be prohibited for any person to engage in the activities of a mortgage loan originator without first obtaining and maintaining a mortgage loan origination license".    A mortgage loan originator is defined as someone who takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan.  The term "mortgage loan" includes the renewal or refinancing of a loan". 

The Act specifically exempts real estate brokers and agents from licensure, but only to the extent that they are performing real estate brokerage activities.  Notably, real estate brokers and agents are not exempt to the extent that they "directly or indirectly negotiate, place or find a mortgage for others".  In any of those events, they must be licensed as mortgage loan originators or mortgage brokers. 

            Normally, real estate brokers and agents do not get involved in negotiating the terms of loans for their clients and should not run afoul of the Act.  However, what about in short-sale situations?  If an agent contacts the seller's lender trying to negotiate terms for a short-sale, does this violate the Act?  We do not have any definitive case law on this yet, but the answer certainly appears to be "yes". 

So, what's an honest agent to do?  In short, the agent should limit their role to that of information provider and have no hand in actual negotiations with the seller's lender.

It is okay for a real estate agent to gather information about the property, undertake a market analysis, create a BPO, suggest a list price for the property, assist in the negotiation of the terms of the sale to a buyer, and to generally do all the things agents normally do for non-short-sale sellers.

It is probably fine for an agent to provide all of the above information to the seller's lender and to provide the lender with any other information or documentation it may request.

However, it is not okay, and likely a violation of the Act, for the agent to negotiate with the lender on behalf of the seller.  For more information or assistance in completing a short sale please visit the contact us page of the website,

By Ned Blumenthal

Weissman, Nowack, Curry & Wilco, P.C.

Nevada

In Florida here with a very specific letter...Also, mortgage brokers/loan originators license can negotiate a short sale. Including attorneys.
Attachments:

I know Connecticut and CA require attorneys to do negotiations, but, it is my understanding ANYONE can work with an agent, but, licensing is required for those persons taht actually speak to banks.....love to see what everyone posts on this.

 

In CT, you don't NEED to be Realtor, but if you're not a realtor, you need a Debt Negotiators license.

Nevada is required to have a State Real Estate Licence NRS: 645.


Mark E. Wilson said:
Nevada is required to have a State Real Estate Licence NRS: 645.

 

Mark - I have been looking for exact language of the law; do you have the sub-number under 645?  thanks much

First let me say that distressed seller's can choose anybody to negotiate their short sale.  

 

In California real estate broker's cannot pay non-licensed SSN or 3rd party companies to negotiate short sales for their clients without the risk of losing their license.  In New Mexico there is a bill that is currently being discussed and some of the larger brokerages will not work with 3rd party SSN's for the same reason as California.  For both states another significant issue working with 3rd party SSN is E&O insurance.  But the main reason is to protect the seller's from companies or individuals with questionable operations.  For states that do not require a license please operate Ethically, Legally, and Morally right!

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