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Gabe,
Do what is right, if you agreed get it done. Get it behind you life is too short and home ownership way to important for your time on this planet. Your whitness would be to do what you agreed to do, and Give God the Glory, that you can!
God Bless!
NAR Code of Ethics requires the Seller provide consent to any such charge if collected by the broker. The Buyer can provide a credit on page 1 of the HUD-1 for an amount that would be equal to that of the fee. However, it would be considered a RESPA violation for the Buyer to be directly charged the fee if a federally insured mortgage is involved. Such a violation could result in the Buyer suing the entity collecting the fee for 3 times the amount plus attorney fees. Furthermore, in Florida only the speicifc real estate brokerage processing the transaction or an attorney actually representing the Seller are permitted to charge such a fee. Short sale processing is considered loan origination which requires a MLO license. Florida real estate licensees are exempt from MLO licensing while processing their own transactions.
You are incorrect. Both Fannie and Freddie purchase guidelines specifically allow the buyer to pay third party short sale negotiation fees. FHA/USDA Guidelines do not specifically allow these fees (nor do they prohibit), but allow "reasonable and customary" fees to be charged to buyer. Since Fannie/Freddie allow third party negotiation fees, they are now considered "Reasonable and Customary." Only VA does not allow buyers to be charged these fees, but then again, VA doesn't allow any fees to buyer. No matter what, all fees must be disclosed on HUD-1 at close.
Respectfully, I am not incorrect. RESPA specifically prohibits the Buyer being charged any fee for which the Buyer did not receive any service in return. The GSEs permit the Buyer paying the fee. RESPA requires the fee to be handled as a credit to the Seller. Example: Seller is paying for the Owner's title policy. The Buyer must pay for the policy and the Seller provides a credit to the Buyer. The Seller cannot be charged the title policy directly.
So....the buyer can pay the fee. It just has to on the HUD properly. The same as the owners title insurance policy (except in reverse). Unless of course the buyer is paying cash, then it can be paid anyway they want.
Or the buyer could sign an agreement, at time of contract, with the negotiator hiring him to handle the short sale on their behalf.
You were doing great up to the point "or the buyer could sign an agreement". No, the buyer does not receive the service. The processor is working for the benefit of the Seller. One can play word games to claim otherwise but one would only be exposed to a RESPA violation. Example: the Seller "requests" the Buyer to utilize the Seller's title company but will not pay the policy. Should the Buyer refuse the Seller will not sell. Therefore, it's a requirement made in violation of RESPA.
RESPA is federal. Real Estate Settlement Procedures Act. If you feel RESPA has been violated you can actually file a claim in small claims court.
I feel for you Gabe. When anyone enters into a real estate transaction you must read all the paperwork and ask questions of your Agent. Gabe, it sounds like you are stuck with the 1,800 if you really want the home, more on this later.
However this points to another issue with short sale, the uses of a 3rd party negotiating service. I believe if a listing agent can’t do there own short sale negotiations you already have an issue. When I’m representing my buyer I always fight off any attempts for my buyer to bring any money to the deal for negotiating the short sale.
Janet and I do not use 3rd party negotiating service for any of are short sale. We have ponied up money for our buyers for 3rd party negotiator fees.
Gabe, I would be a bit annoyed at my (friend) Agent for getting you into this, ask him to split the cost. (another reason to keep friends as friends and not for business)
Should I pay the fee? Yes why indeed should you pay...
Chances are no one knows why you have to pay! All they know is there was a short sale and someone needed to negotiate the short sale and the seller didn't have money to pay for it and the listing broker didn't want to use his/her commission to pay for it so they thought the cool thing to do is to throw it onto you, the buyer.
Like I stated before, outside of the HUD is tricky and maybe in violation of RESPA. The proper way outside of the HUD was for the listing broker pay for the services and then have you pay your broker (your friend's boss) directly. That way you paid for services that belonged to you and that do not have to show up on the HUD.
Within the HUD, they should have disclosed these expenses to you properly, shoved them on the seller side of the HUD and if rejected, have them paid by you on the buyer side of the HUD.
If they collected the $1000 before the date on the approval letter, they also violated California law. Look at www.dre.ca.gov for the law regarding collecting upfront fees on loan modifications (it applies to short sales as well as it is a form of debt settlement).
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