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State of CT finally sets it straight for Debt Negotiators.
Posted on 20. Jul, 2011 by ctlms in Blog, Foreclosures, My Blog, News, Real Estate, Short Sale
Clarification is finally here!
So it has been over 2 months since the CT Depts of Banking and Consumer Protection confused the entire real estate community with a joint warning letter regarding Debt Negotiators in CT.
The letter dated 5/10/11 was apparently in response to one or more complaints brought about by the actions of one or more Debt Negotiators. I do not know the specifics of the issues or complaints but can gather enough from the letter to know the actions indicated were not only bad business, but obvious to result in complaints. We always strive for 100% transparency and disclosure with all parties involved and all our agreements are in writing.
In general the letter made it appear that all Debt Negotiators in CT may be violating the regulations. It also suggested that if a debt negotiator were paid more than $500 from any party,the were violating the $500 max fee cap to the mortgagor and that real estate Brokers could not pay for the service.
This letter jeopardized the businesses of all Debt Negotiators in CT and the services they provide to their clients.
It has taken the Debt Negotiator industry over 60 days to get these state agencies to clarify their opinions on what we do. Over that time we have had several phone and email conversations with both agencies. This all culminated with a meeting, which I attended, with the Commissioner of the Debt Of Banking and several representatives of the Dept of Consumer Protection who attended on the behalf of their commissioner who could not attend.
This meeting was extremely helpful to all parties in clearing the confusion and both agencies agreed to address our concerns in writing by the end of this week.
On Monday 7/18/11 the Dept of Banking issued it's opinion letter. DOB Opinion Letter 7-18-11 The letter stated clearly that the fee cap of $500 for payments from the Mortgagor DOES NOT prohibit a real estate firm or any other person or entity who is not the Mortgagor from paying for Debt Negotiation services and that the $500 cap does not apply. The $500 fee applies to payments for Debt Negotiation services paid for by the Mortgagor (seller) directly. So it is perfectly legal for a real estate firm to hire a debt negotiator who is properly licensed in CT to negotiate on their clients behalf in securing a short sale approval. This service is provided to the real estate firm to accomplish a task that the real estate agent is either not properly equipped to do themselves, or simply does not wish to do. It is also legal for that Broker to agree in writing to compensate the debt negotiator for this services contingent on the successful sale of the property.
On Wednesday 7/20/11 the Dept of Consumer Protection issued it's own opinion letter. DCP Opinion Letter 7-18-11 In it, the Dept of Consumer Protection states that "It is appropriate for real estate licensees to retain an outside party for the purpose of debt negotiation and those services fall within the scope of the debt negotiator's work." The letter also address how this "fee for ancillary service" should be paid. 1. The fee should be a dollar amount agreed to by the Broker and the Debt Negotiation company in writing and should not be a % of the sales price so as not to be construed as a commission split. 2. The fee should be paid by the Broker after closing.
These two letters finally put to rest the confusion resulting from the letter these agencies issued on 5/10/11.
It also seems that the actions of one or more debt negotiators has tainted the view of the industry by some. This is very unfortunate for those of us who work within the laws and regulations we are governed by and strive to provide the very best service to the sellers' and real estate agents we serve.
It is unfortunate that it took so long to get these issues addressed but we have done our best during this time to not let this affect our clients.
Please contact Sean Wilder at Loss Mit Services for any questions about what this means for your clients.
Sean Wilder
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Bio
Sean Wilder started in the pre-foreclosure business in 2007. Previously he enjoyed successbusiness in the transportation industry, real estate investing and as a licensed Realtor. Sean brought the same determination and work ethic that lead to great success in his previous businesses to Loss Mit Services based in East Windsor, CT. His focus, combined with his drive to succeed, have been essential to his success as one of the area's top short sale negotiators.
Known for finding creative ways to overcome hurdles and never ending persistence; Sean, believes in the power of team. Sean and his team are in the trenches everyday, plowing through challenges and objections while negotiating with various lenders, and finding solutions to difficult problems. It is this daily experience that brings Loss Mit Services consistent success and provides them the knowledge to share.
Sean belongs to a number of industry groups and associations that allow him to collaborate, share, learn, teach and stay updated on the latest changes in the pre-foreclosure industry at the federal, state, local and lender specific levels.
Effective Oct 1, 2009 all debt negotiation companies that offer loan modification, short sale, or foreclosure rescue services needed to be licensed by the CT Dept of Banking. Sean and his company Loss Mit Services were the 1st to be awarded the Debt Negotiation License NMLS # 828273 which can be verified at the CT Dept of Banking Website by Clicking Here. In addition, effective Oct 1, 2011 Debt Negotiators were required to also be licensed Mortgage Loan originators and Sean also has received this license, NMLS# LO-831853.
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