What lenders allow a law firm to get paid from the lenders proceeds at settlement ?
I am the operations manager for Friedman Law Associates, P.C. Our law firm is a national law firm which specializes in short sale, loss mitigation negotiation, and foreclosure defense.. As you all may know, many states are passing legislation which is advising that you must be a lawyer to negotiation short sales. All other individuals are categorized as an agent that is unauthorized to practice law. Home owners can go after the negotiating agent and sue them for negligence. We are looking to launch a new program which would educate the real estate community on how to make a short sale transaction, a traditional sales transaction. We would like to offer short sale and loss mitigation services to the real estate community. Once again, we are a national law firm with attorney's in 46 states. Our fee for short sale negotiation is contigent upon the deal closing.
I know that Bank of America will not pay a law firm, or third party agent, from the lenders proceeds at closing. Does anyone know any other lenders that have this policy and is there a way around Bank of America's policy ?
Please let me know your thoughts about our program and if any other lenders will not compensate a law firm from the proceeds at closing.
Thank you
Replies to This Discussion
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Permalink Reply by Kevin - Greenville, SC on
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North Carolina • The NC State Bar has taken the position that short sale negotiations are the practice of law. Also, I believe in GA only a Mortgage Broker can negotiate a Short Sale.
Here is South Carolina's take - http://screaltors.org/news/2010/10/short-sale-negotiators-must-be-l...
The SC Consumer Protection Code requires that short sale negotiators be licensed SC attorneys or licensed SC consumer credit counselors.
Exemptions include SC real estate brokers and SC mortgage brokers when doing real estate work with short sale transactions.
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Permalink Reply by Elliott Levine on
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Kevin,
You hit the nail right on the head. More and more states are identifying short sale negotiations as the practice of law. I believe someone commented that they were not worried, because they have an errors and ommissions policy. Well guess what, I know a real estate firm thet lost their E & O policy because they were sued for negligence in a short sale transaction. I would suggest that you all do your homework and contact your insurance carrier. I am willing to bet that they would drop you in a heart beat if you had a law suit filed from a consumer that you negotiated a short sale for. I didnt realize that this forum was dedicated soley for short sale realtors that are immune to state legislation regarding the"unauthorized practice of law. I also didnt realize that every realtor in this community is a legal expert. But what should I know? Our firm has 46 attorneys in 46 states throughout the nation that specialize in loss mitigation and real estate.
I didnt realize that the laws only affected the smaller states where the legal restrictions really count. I would asssume that New York, New Jersey, etc. are small states that really dont count.
I was trying to educate the community that there is already new legislation in some states and many more coming into play that advise that a short sale negotiation is the practice of law. I didnt say I agreed with the legislation, but it is out there, and will be enforced.
So, Harry why take the words from a "national law firm" when the superstars on this site apparently know all the laws and apparently have immunity.
On a side note Harry, our firm works short sales on a 100% contigency. If we are unable to successfully close the short sale transaction, then we dont get compensated. We put our money where our mouth's are.
Once again, I am a firm believer in turning real estate back into a more traditional role. Let the realtors spend their valuable time getting listings, selling, and closing homes.
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I actually know Attorney's in North Carolina who are getting out of the Short Sale business because of the fact that Servicer's are cutting their take and they find it's not a good business model for them to continue to do so. Where does this leave homeowners?
Just one of the unintended or intended consequences of this Law in NC in my opinion.
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IMr. Clay,
Duly noted and respected.
I am just helping to educate the community on what is transpiring within the industry.
I understand the "black cloud" that surrounds this industry, and the bad taste that most realtors have towards some of the "fly by night" so called law firms that have entered this industry.
I can also assure you that many realtors would benefit by the use of a legitimate law firm that has the staff, knowledge, expertise, and executive level contacts to close their short sale.
We have actually developed a concept that will revolutionize the short sale industry and will once again, make a short sale transaction a traditinal transaction. This concept was developed to help the real estate industry and to help get the economy moving in the right direction.
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Permalink Reply by Jeff Payne on
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with all due respect, we appreciate your input and letting us know of what might be transpiring but you have to realize that many of us have been doing short sales for a long time and if we had a dollar for every "concept to revolutionize" short sales, we would not have to work anymore. So we are skeptical to say the least :)
We have a regular meeting, 4 times a year with the loss mitigation VPs of BofA, Citi, Wells, Fannie etc. So we have a pretty good insight as to what is going on. Matter of fact, it was real estate agents who helped make the relationship with Equator and BofA and also realtors who helped get Wells to use equator. We have our next short sale meeting next month in Orlando with these lenders and investors.
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Jeff,
Do you happen to know the education and qualification requirements of the employees that are making the decision within the lenders for a short sale ? Why dont you ask the VP's at the next meeting ?
If they provide you with an honest answer, which will not happen, you would be shocked. The economy and future of our country are in the hands of these individuals; its frightening and is a disgrace.
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One question, are you an attorney or do you work for an attorney?
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Elliot, like I said yesterday, you are on a sight with some very smart, savvy and succesful short sale agents. We have as much or more short sale experience as you do. When you come here with your opinion, expect a debate.
As far as your E&O opinion, that is simply your opinion. Have companies been dropped by their E&O insurance, of course they have. Have companies had lawsuits and not been dropped from E&O, of course. It is a good idea for an agent to understand what their E&O covers, as far as my E&O, there are no problems with them with me working short sales.
Again, "unauthorized practice of law". We are not practicing law, we are processing a short sale. Of course that is my opinion and I am entitled to it just as you are entitled to your opinion. I am in the state of Florida and it is perfectly legal for me to process a short sale. Can not and will not speak for other states, only the one that I work in.
No one here claims to be a legal expert except for you. We don't just take the words from a "national law firm" because it is your opinion and NAR and in my case FAR advises us otherwise.
No one here said we have any immunity but you sure seem to think that you are covered in teflon and think that agents can not succeed without you.
I dont do well with your statement "If we are unable to close the short sale transaction". Just curious, what is your closing percentage on short sales that you work?
Your views are your views and won't get much agreement here. Especially your last statement. A short sale is simply just a process and as much as you try to convince us that we are wasting our time but that is simply just a "myth" and there are no numbers anywhere that says an agent who uses an attorney to do their short sales does "X" amount of extra business. At least I have yet to see it. I actually see the top agents who don't outsource their short sale.
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Elliot, there are few things in here that concern me and I am sure others like Harry also.
- You claim to specialize in short sales but have to ask which lenders will allow your fee?
- You also claim that it is illegal for anyone other than an attorney to work a short sale?
Both major red flags to me!
Please explain what states require one to be an attorney to negotiate a short sale. Florida is NOT one of them.
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Jeff,
I apologize if my intitial statement and topic was misconstrued.
1. As you know, the lenders change their policies constantly. I wanted to know if anyone knew of any specific lender changes or loopholes that we might be miissing.
2. Please see my response to Harry's question about the "unauthorized practice of law" legislation and law suits. I did not say that it was illegal. Broker/owners and realtors should be extremely concerned about the liabilty of negotiating a short sale. States are starting to pass legislation allowing consumers to file a civil law suit against realtors and third parties for the "unauthorized practice of law".
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No sweat, I am feeling a little bit fiesty today :) We appreciate your input!
I dont believe I have EVER practiced law while working a short sale. Sellers are required to sign a document stating that should they have any questions, they need to seek legal advice.
Our society loves to file lawsuits for anything and as a real estate broker, we run that risk anytime we enter into a contract and we are always concerned about liability of doing anything in this business.
How does being an attorney relieve you of liability?
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