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

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Permalink Reply by Joseph Alfe on January 24, 2012 at 9:47am

Elliot, as far as I know, there are NO states that require a law firm to do short sales.  None.  I have also read AG White papers from many states, including FL, IL, and NJ, and every single one advised that negotiating short sales was NOT the practice of law.  They did, however, unanimously, advise that certain parts of a short sale, namely any discussion of deficiency, review of approval, and handling of promissory notes were in fact the practice of law, as they should be.  This is why, as a third party negotiator, we require that the seller have an attorney represent them and handle these aspects of the transaction. As negotiators, we have strong relationships with short sale trained attorneys and agents, and my business model is that we all leverage each others expertise: I am an expert and getting short sales approved.  The agent is the marketing expert, and the attorney is the legal expert, and we all owe duty to the seller to close the deal and put the seller in a better financial position. Perhaps this is why we are so successful on a national scale. One thing Elliot is correct about though is E&O.  Go ahead, call your provider, and ask if they cover short sales and negligence.  The answer is no because it is out of scope with a real estate agents customary actions.  This does not mean, however, they they are strictly in the legal realm either.

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