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 Elliott Levine on January 23, 2012 at 7:39am

Jeff,

 

I appreciate your input and concerns. Believe it or not, when you are negotiating a short sale, and there is a potential for a deficiency or other legal action, the negotiating agent it technically providing legal advice.  The issue is that states are making it easier for consumers to file frivolous law suits for the "unauthorized practice of law". The consumer no longer has to file a complaint with the proper state agencies. I  happen to agree with you that the court system is fulll of frivolous, garbage law suits. As a law firm, we have insurance to protect our firm agains any of these law suits and we obviously never have the issue of "unauthorized practice of law"

 

Most realtors do not know what they are doing when it comes down to a short sale negotiation, and do not protect the sellers best interest.

 

We are actually trying to help the real estate community by educating them on the short sale process, and ultimately take the burden off of the real estate community. We want the realt eastate community to do what they do best, list and sell homes. Why not pass the burden off to a nationwide licensed law firm and get back to traditional real estate ?

Permalink Reply by Jeff Payne on January 23, 2012 at 7:59am

I provide them with the approval letter and they take it to their attorney to review, nothing more than that.  I NEVER advise them of the terms of the approval letter, I advise them to seek legal advice, of which I can not provide.

We also have errors and omissions insurance.

I agree with you somewhat on agents not knowing what they are doing, I would not say most, especially when talking about agents on this website.  Those agents that don't know what they are doing need to stay away from listing short sales. 

Permalink Reply by Kevin - Greenville, SC on January 23, 2012 at 6:00pm

Jeff,

What happended to this in Florida? - http://blog.berlinpatten.com/2011/02/08/is-short-sale-negotiating-t....

Is it a dead issue with the Florida Bar?

Permalink Reply by Jeff Payne on January 24, 2012 at 5:13am

Dead on arrival :)

Permalink Reply by Elliott Levine on January 23, 2012 at 7:06am

The legislation was passed in NJ and does not specifically state that non attorneys cannot negotiate short sales and it does not prohibit realtors from doing so. The legislation does state that a consumer can file a civil suit against a third party negotiator for the "unauthorized practice of law".  We have seen many law suits filed against realtors for negligence and not protecting the seller's best interest in  a short sale transaction.  The realtors are technically practicing law when they negotiate a short sale transaction. These law suits are increasing every single month and more states are pushing against the "unauthorized practice of law".  A licensed law firm, with a local attorney in the state, are the only ones that can practice law.

Permalink Reply by Jeff Payne on January 23, 2012 at 7:12am

Nice try Elliot, this topic has been beaten to death here on this site.   Sure a seller can sue for anything, what protects you from a lawsuit more than a realtor?

There have been plenty of lawsuits by sellers on non short sale properties too, does that mean you think we should not be working equity sales too?

No law firm is going to work short sales that I am involved in because there is no need for a law firm to work the short sale, it is a simple process that any agent can  do in my opinion.  Why would a lawfirm do any better of a job? 

As far as getting paid by the lenders, the lenders know that there is no need to pay an attorney to negotiate a short sale. 

Permalink Reply by Elliott Levine on January 23, 2012 at 7:27am

Jeff,

 

Please read the NJ assembly bill No 1050. Many other states will soon follow. You must not be a good realtor, beacuse you are obviously spending more time negotiating short sales than obtaining new listings and selling homes. You are naive to think you are not vulnerable to these law suits.

Why wouldn't you pass on the negtoation and practice of law on to a licensed law firm that is authorized to practice law and allow yourself the time to get more listings and sell homes ?  I thought that top producing agents spend their time obtaining listings and selling homes? 

Permalink Reply by Jeff Payne on January 23, 2012 at 7:47am

Sorry, wrong on all counts.  Not that I really need to justify it with you but I am consistantly in the top 5, yes top 5 not 5% in my local board of realtors for closed sales.  2009 I was the #1 agent for number of closed sales in my local board.  In the top 10 for the Keller Williams Gulf States Region for closed sales for the last 5 years running.

Gary Keller must be mistaken when he asks me to be on his panels at national conventions too.

taking too much time to negotiate short sales ? quite the contrary, I have a system in place to work short sales.  REO sales take more time than a short sale. 

Why would I pass on my responsibility to someone who has no relationship whatsoever to the seller who I have an agreement with and to someone who overall (attorneys) have a terrible track record for short sale approvals. 

I can play your silly game too and say I thought attorneys were focused on billing hours and money?  Why would an attorney want to take on a short sale that might pay them a few thousand dollars if they do indeed take a tremendous amount of time to accomplish?   I would guess because the paralegal does everything and the attorney doesnt ever get involved.

I understand the liability of working short sales but you have not convinced me how you would not be exposed to the same liability.  I have liability everytime I enter a contract.

I guess I could add that you must not be a good attorney if you have to negotiate short sales and have to come to this site for advice :)  since you took the shot at me not being a good agent

Permalink Reply by Elliott Levine on January 23, 2012 at 8:06am

Jeff,

 

My apologies as I am fiesty today also. I dont your track record or what type of agent you are. Again, I do apologize for taking the shot on you.

 

I wanted to educate the community of this legislation and potential liabilty. I also came to this sight to help educate myself.

We are not exposed to the same liabiility because the regulation is secific to the "unauthorized practice of law". The short sale negotiation falls under this umbrella. As a law firm, we are obviously licensed to practice law. The law firm is also insured against through their liability and malpractice insurance.

 

 

Permalink Reply by Jeff Payne on January 23, 2012 at 8:13am

No sweat, I have a thick skin :)  takes alot to hurt my feelings!

We appreciate your contributions but keep in mind you are on a site with high level achievers and thinkers and many on this site do a great job of representing their sellers in short sale situations.

Again, I don't negotiate anything with anyone other than my listing agreement with the seller.  I don't practice law and don't fall under that umbrella.  Just as I don't do any negotiating on an equity sale, I am a transaction broker and any contract is between the buyer and the seller and I do not negotiate anything. 

This topic has been beat to death.  Just for the record, my opinion is based on my attorneys opinion.

Permalink Reply by Jeff Payne on January 23, 2012 at 9:44am

Just out of curiosity, how much time does it take your law firm on average to get a short sale approved.  In terms of time, how many hours are spent on each file once an offer is accepted and sent to you until the time it is approved.

 

Permalink Reply by Elliott Levine on January 23, 2012 at 7:50am

Brian,

 

Thank you for your reply....I actuallly wasnt trying to drum up business.....I was looking for feedback regarding the lenders. I agree with you regarding the short sale. Unfortunately, we all know that the governement has a way of hurting industry's when the over regulate. The mortgage/real estate industry went from the Wild West to regulated "lock down" die to the governments involvement.

 

I just wanted to let the community know that there is more regulation, and legislation involved within the short sale industry.

 

I thought it would make the most sense for realtors to try to make short sales as traditional as possible and go back to listing and selling. I beleive this is the way to get the economy back on track. The real estate community needs to get these homes sold and increase home values.  

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