NEW BOFA Letter of Authorization... only licensed agents or attorneys can be authorized on accounts now? That rules out an assistant being authorized to follow up on even mundane "Did you get the fax?" calls... escalating with BOFA
I am letting my contact know.
The discussion seems to be getting off course.
The issue is what to do about the "new" language in the third party authorization regarding misrepresentation.
Here is the language again: "(ii) shall not knowingly misrepresent or omit to state, any material fact in order to induce the Borrower(s), BANA, the lender, the investor or the insurer to agree to the terms of a Short Sale that the Borrower(s), BANA, the lender the investor or the insurer would not have agreed to had all material facts been known,".
This is in fact not new at all. The Freddie Mac language that most lenders adopted by mandate in the Arms Length Affidavit that accompanies most all short sale approvals says the same thing. See my article on it at this link -
The real issue seems to me to be the duty that this language imposes on the person making the statement. It would seem to me that merely participating in the short sale as a facilitator or agent or closer and knowing what you know is not enough. One cannot turn a blind eye to something obviously going on that is wrong. That is why I created a statement that I require all buyers, sellers, and agents to sign before I put my John Hancock on anything were I am attesting to no misrepresentation. The only difference with this new document is the timing - I used to get MY document signed by all parties before I signed the arms length affidiavit - but now I need to get the seller to sign it at the inception of the representation (because that is when I have to sign this Third Party Authorization).
A copy of the text from my form is below:
PRE-CLOSING AFFIDAVIT AND STATEMENT OF COMPLIANCE
The undersigned persons make the assertions and statements contained herein for the purpose of inducing Richard P. Zaretsky, P.A. and Automated Land Title Company to cooperate and participate in the making of statements and affirmations to Freddie Mac or its Servicer or any other lender or servicer (hereinafter the “Shorted Lender”) required to consummate the short sale of the Property described herein.
The Property is described as:
Street Address: ___________________________________________________________________
City: ___________________________________________ State of Florida
Under Contract between _________________________ and ________________________ as Buyers and ____________________________ and ___________________________ as Sellers with an effective date of ___________________________.
Each of the persons executing this document makes the following positive affirmations:
1. I have not and do not intend to falsely indicate on a new short sale listing that there is an offer on a property in order to discourage legitimate offers and protect an anyone’s planned low bid for the property, and I have no knowledge of any higher offers for the Property that have not been disclosed to the Shorted Lender.
2. I have not participated and do not intend to participate in manipulating the short sale listing price by making the Property or improvements thereon look more distressed than it really is (“reverse staging”), inflated repair estimates, or used similar tactics designed to obtain an artificially low home or Property value on the Broker Price Opinion (the “BPO”) or appraisal. Neither the buyer, buyer’s agent, nor buyer’s attorney has been the contact point for the agents preparing the BPO, and the sole contact point has been the seller or the seller’s real estate agent.
3. I have not and do not intend to participate nor promote a “flipping” scheme where a person “buys” a house at a short sale without putting down any of his own money and then sells it a few hours (or days) later to a legitimate buyer at a much higher price, and I have not participated in encouraging or causing the falsification of title and/or loan documents to fool a lender into approving the ultimate buyer’s mortgage, which funds are being used to settle the earlier closing on the house being “acquired” at the short sale at a lower price. There are no documents or agreements between any of the parties or any third party (except Buyer’s lender) regarding this Property that have not been fully disclosed to the Seller’s Shorted Lender.
4. I have not and do not intend to manipulate the HUD-1 settlement statement so that anyone can skim away net proceeds from the sale for himself or other parties in the transaction without the seller’s or investor’s knowledge.
5. I have no knowledge of any agreements, understandings or contracts between the buyer and seller or any other party, that would allow the seller to remain in possession of the Property for a period of greater than 90 days after the transfer of title of the Property to the Seller, or to later regain title to the Property.
6. I will not be receiving funds from the closing except as expressly set forth in the HUD-1 settlement statement.
7. The total of the documents that create the Contract for Purchase and Sale of the Property is the Purchase and Sale Agreement, written and mandatory or customary disclosures regarding the Property used by approved forms of the Florida Supreme Court, and short sale addendum to the Purchase and Sale Agreement, all of which have been provided to the Shorted Lender as part of this transaction. There are no documents nor agreements between any of the parties that have not been fully disclosed to the Seller’s Shorted Lender(s).
8. The buyer and seller to this transaction dealt at “arms length”, meaning that the parties are independent of each other and are unrelated by family, marriage or commercial enterprise.
9. If I am the buyer, I am not a “straw” buyer and I am buying the Property for my own account.
10. Any investigation into these affirmative statements would find them to be true and correct. I have not made any disclosure to Richard P. Zaretsky P.A. or Automated Land Title Company, and there is no disclosure to make, that would be contrary to the statements that I am making in this document and each of the statements made herein are true and correct.
Then the affidavit portion with attestations and notary acknowledgements follow.
The element here that is being accomplished is that an "inquiry" of the other parties (for the third party authorization it is only from the seller) is being made, being more than the "hear no evil, see no evil" threshold that no inquiry under oath would accomplish. In other words it is the difference from "I did not hear from anyone about anything wrong" and instead is, "I made inquiry of the parties (or the buyer) and no element of misrepresetation was provided to me that would make my statement false or misleading to my knowledge." Some people would call this "due diligence" and that is just what it is.
Richard - Thank you so much for sharing this! Some questions - 1. By doing this and taking an active role inquiring, would one then be open to "but you didn't inquire about xyz" 2. Have you received pushback from buyer's agents/buyers about having to sign one of your firm's forms