Replies to This Discussion

Permalink Reply by Richard Zaretsky on October 3, 2011 at 3:09am

Storm -

 

Not malpractice, but unsupported prosections or defenses can get the attorney in trouble.  See my article

FRIVOLOUS DEFENSE TO FORECLOSURE CAN COST BORROWER $$$

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Permalink Reply by storm bradford on October 3, 2011 at 3:28am

No doubt, "unsupported prosections or defenses can get the attorney in trouble." See our our latest press release: "Beware of the Latest Foreclosure Rescue Scam--Pretender Defenders 

http://www.mortgagefraudexaminers.com/blog/2011/08/our-latest-press...

 

However, in the article we explain how we contacted several ethics counsel of different state bars across the country, and they unanimously agreed it was malpractice to fail to examine the contract!

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Permalink Reply by Jim Schroeder on October 3, 2011 at 5:12am

I am an attorney and a real estate agent serving clients in southern New Jersey.

 

I read this over the weekend and was planning on sitting down this afternoon to write my perspective then in scrolling through the recent comments found out that Richard Zaretsky had already not only beat me to the punch but done better than I would have - Kudos.

 

I do not do modifications for clients.  However while this may be the 100th time you or I have looked at a distressed homeowner scenario it is the client's first and they sometimes insist on trying to do a modification first.  If they are a month or two late I usually will offer them an option, I will coach them through doing it themselves charging for an hour to start and giving them the basic outline of what will happen.  I offer that they can hire me to look at any document they want or come back with any questions billed on an hourly basis if they want.  I will not contact the lender on their behalf.

 

In the few cases where people accepted this offer it has led to the client retaining me 60-90 days later when they realized that modification is not going to help their situation as much as they though, they have educated themselves on the process and their other options and they understand the landscape a little better.  What I get is an educated Short Sale client who now does not loose sleep at night wondering if they could have done a modification.

 

As someone stated above short sales are a lot of work for $1,500.  However any realtor who does short sales without strongly suggesting to their client obtain the assistance of an attorney to advise and negotiate with them is doing their client a disservice.  Short Sales and DIL's are breach of contract cases and there are substantial consequences for the client (and potentially the real estate agent) if they are not handled correctly.  I agree with the premise that many attorneys just hand the file to a paralegal and forget about it which is not much protection for the client.

 

There are two issues I want to raise:

 

1.  $1500 is not enough for an attorney to handle these files and the amount of work that needs done.  If lenders would offer $3-5K per file they would still come out ahead considering the cost of foreclosure in most states is well above this and many solo and small firm attorneys could and would give realtors options for representation which would match their own commitment to customer/client service and communication.

 

2. An unrelated but important point.  I know the system is unfair to realtors sometimes.  When I have done everything I can to present what I believe is a highest and best offer to the lender, negotiated with the second lien holder, accelerated the file as high as I can in the lender's company and the lender comes back with a Deed in Lieu offer, don't go crazy on me.  I know you have worked hard for the client but insisting I "hide" the DIL offer from the client or accusing the attorney of not doing the best they could is irrational and unproductive.

The system is flawed and you got screwed.  I know it, you know it and there is really nothing that can be done about it.  I am going to refer the next few leads I have in the area your way if I think you are the best person for the client. 

 

The distressed homeowner market resembles the Wild West sometimes or the first day of high school but it is fulfilling to help people who are in real need of good counsel and get them from a home where the debt is killing them and their relationships to a home where, while often not as "plush" is tenable and provides a decent place to build a good life.

 

Jim Schroeder

www.southjerseyshortsaleattorney.com

[email protected]

 

Attorneys and Realtors blow it when they overpromise to get the client.  Often it works out in the short term and if you are planning on getting out of the business in a few years and don't sweat stuff like ethics then I guess all is well. 

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Permalink Reply by Michael Valdes on October 3, 2011 at 5:15am

From my experience, the real estate attorney's brought in by my sellers on my closed short sales sometimes have been able to get the deficiency lowered (if there was one) a little bit more than we were able to negotiate or were able to reduce the money due from the seller at closing down a little bit if the bank was requiring the seller to bring money to the table at closing.

 

It seems the average attorney cost is around $1500 to do this final negotiation and sometimes is worth it because they were able to save the seller a few grand. Does it happen on every Tampa short sale, no, but is it worth a gamble... I say yes.

 

If the attorney is charging more than $1500 for a final negotiation fee, I would look elsewhere.

Also, this will also be an out of pocket expense for the seller because the banks will not pay their fees.

 

On short sale's where I have seen the attorneys handle the entire short sale negotiation process themselves (not using the Realtor or title co to negotiate), they sometimes hurt the seller because they tack on addidional fees to the seller and buyer. For example, If a buyer is buying a $175,000 home and the attorney tacked on a 1.5% (negotiation) fee (sometimes it is higher) and is charging it to the buyer, the buyer then has to come up with an additional minimum of $2,625 + regular loan closing costs. These costs can be quite high especially if the buyer is doing an FHA loan and could actually kill the deal.

 

 

Michael Valdes

Tampa Short Sale Realtor

e-Pro Realtor/ Mtg Broker, TRC, CPMS

Certified in Distressed Properties

(800)975-7205 Office

www.FlaPropertyFinder.com

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Permalink Reply by Maria Evans on October 3, 2011 at 5:18am

Thank you for the information about the attorney Brian. I will pass to a client who called last week about a property she has in Florida.... Can you send his contact info to my email? [email protected]

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Permalink Reply by Maria Evans on October 3, 2011 at 5:55am

DIL is not a good option for any seller and will be considered by the bank only you can't find a buyer. Since everything will be sold for the right price the issue is being able to convince the bank you have the best offer possible. Thats the beauty of SS. For the right price you will sell it. In case the seller has to do a DIL because can't find a buyer,  the process is similar to the short sale. No short cut. The greatest advantage of a short sale is that you will be able to get the conditions  in writing sooner. I just negotiated with a bank to change the approval and waive the defficiency and they did. 

About legal advice... ok, attorneys are the only ones that can give legal advice which does not mean that all attorneys will give the best advice. And back to my previous point, realtors make more money and have more motivation to get SS done.

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Permalink Reply by Douglas Lineberry on October 3, 2011 at 6:34am

Let me preface this comment by saying I am an attorney.  Let me also state that I haven't read every single reply to this post, but the many that I have read seem to reflect the view that attorneys are only interested in generating a fee, that attorneys don't understand short sales, that attorneys would prefer people undertake bankruptcy, etc.

 

I know a number of attorneys that do a fantastic job for distressed homeowners.  They properly review the full scope of the financial problems that the homeowner faces and then present the homeowner with ALL options, then help the homeowner select the option that is the most likely to produce the best overall result for the homeowner.  That may or may not be something that continues to generate work for the attorney.  (Full disclosure - my firm used to negotiate short sales and assist with modifications in some circumstances.  We stopped doing it because I concluded that agents, loan originators and escrow companies are institutionally better suited for the work.  Our work is now limited to consultation/assessment, foreclosure mediation under Washington's new mediation law and of course bankruptcy if that's the right solution.  Everything else is referred back to the listing agent or appropriate service provider.)

 

There are, unfortunately, attorneys that don't do such a good job.  I will acknowledge that there are attorneys out there that have shortcomings.  However, there are also other people counseling homeowners that have their own shortcomings.  I have known real estate agents that were simply dying to get a homeowner to proceed with a short sale, but the situation was not at all appropriate for a short sale and was better suited to address in bankruptcy.  Why was the agent so desperate to have the homeowner do a short sale?  Well, I'm not entirely sure, but the fact that the agent wasn't going to make a dime unless the homeowner proceeded with a short sale surely suggests something.

 

The simple fact of the matter is that every situation is different.  Homeowners that are in trouble usually have many more financial problems than the home.  Every situation has to be independently analyzed in order to find the most suitable solution.  Sometimes people will get sent in the right direction by good attorneys, real estate agents and other professional advisors.  Sometimes they will be led astray, but I posit to you all that there are just as many non-attorneys leading them astray as there are attorneys that may be doing so.

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Permalink Reply by Janice Moores on October 3, 2011 at 8:00am

I am a short sale paralegal. I do nothing but short sales all day, every day.  I work for a firm handles mostly real estate.  I work closely with Realtors and sellers.  I just had an experience with a Realtor who countered for his buyer 20K higher last Wed., and because he didn't like how Bank of America came back ... he talked his buyer into reducing their offer backward 20K to "make a statement to the lender".

 

We are here to make transactions "work". This Realtor said, " he was going to show Bank of America!" Really? I think having a legal spin on short sales has greater impact on getting to the table then an emotional Realtor who wants to pick a fight and make a stand.

 

Rediculous.  Who is hurting the process??

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Permalink Reply by Jeff Payne on October 3, 2011 at 8:26am

Janice, just curious.  How often does the attorney touch the short sale package compared to the number of times that you touch it?  Not trying to flame this topic, just curious as to the typical process?

Sure there are realtors who are emotional, I have dealt with attorneys who were way to emotionally involved too but keep in mind that the realtor is just doing what the buyer chose to do.   To me, a legal spin means nothing in a short sale, nothing more than having an "expert" designation to negotiate short sales.  Having experience in short sales and being willing to fight them to the end is what is most important.

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Permalink Reply by Douglas Lineberry on October 3, 2011 at 9:45am

The attorney is also just doing what the buyer choose to do.  We give advice and make recommendations, but ultimately the decision as to what strategy to undertake belongs to the client.

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Permalink Reply by Ray Snook on October 3, 2011 at 9:01am

Well without knowing what Bank of America countered it is hard to say whether he persuaded the buyer through emotion or whether he had their best interests at the front of his mind. Bank of America are known for making ridiculous counters, decisions, valuations, unreasonable demands, the list goes on. It is nice to know that you as a short sale paralegal work closely with realtors and sellers. Not sure how you get paid though, is it when the short sale is successful or do you get paid regardless? With respect - how much more effort does someone go to when they are paid by the hour rather than by results? Are attorneys on hand 24/7 to counsel and advise like most short sale agents? I talk to my clients at 11pm at night when they are scared, worried or just need a little but of reassurance. We give a full service at no cost. A realtor will work as many short sales as they can sensibly manage at one time, and they will not get paid for those that do not close. An attorney who charges an upfront fee can take 500 files, get a fee for each and close 20% of them and not see any reduction in their income. Who is suffering as a result? The homeowners.

 

 I think many realtors resent the kind of attorney that does encroach on our territory expecting an upfront fee regardless of whether the short sale closes or not, but worse an attorney that charges a fee to give false hope of a loan modification.  A distressed homeowner doesn't usually have money to throw around, especially when there is no guarantee they will get the desired result from using an attorney. At least if their short sale fails through using a realtor they are not out of pocket as well.  Now.... if there were statistics to prove that using an attorney greatly increases the success of a short sale then perhaps we would not be so skeptical.

And yes I recognize there are agents who should not be doing short sales but they are not getting paid if they do a bad job. Attorneys who take an upfront fee are.

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Permalink Reply by Janice Moores on October 3, 2011 at 9:26am

Whoa there big guy... easy does it. 

Our firm does not get paid a penny unless the file goes to closing.  In fact, I do many short sales just to help out Realtors make a sale work, without the firm being paid.  If there is an opportunity to get a home to closing vs. foreclosure, that is what we do.

 

I have been a real estate Broker for 23 years, so I know how both sides work.

 

You may want to recheck before you jump in next time.

Thanks for your input.

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