Loss Mit Services

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

Bank of America Refuses to Allow Dual Agents on Short Sales.

Posted on 18. Apr, 2011 by ctlms in Foreclosures, My Blog, News, Real Estate, Short Sale

Bank of America does not allow Dual Agents.

This is just a quick update on a new disclosure being required by Bank of America.

Bank of America now requires the agents involved in a short sale to sign a document that states, among other things, that there is no Dual Agency.  It also defines dual agency as one agent representing the buyer and seller.

This isn't all that new.  FHA has always disallowed this.  And in fact, it's just a bad idea to do when your seller is in a distressed sale situation.

Many lenders that do allow dual agency will cut the commission in half when it is done.  So once again, not a good idea anyway.

But Bank of America isn't saying they will cut your commission, their saying you just can't do it and do a short sale with them.

Just keep this in mind when dealing with a Bank of America short sale.

Sean Wilder

So what’s going to be new this year?

Posted on 24. Mar, 2011 by ctlms in Foreclosures, My Blog, News, Real Estate, Short Sale

This industry in constantly changing.  So what do we expect this year?

Last year saw major changes with the addition of the HAFA short sale program to the HAMP program that was already in place.  Many of the lenders have still not gotten this program down pat which can cause extra delays in the process.

Now, congress is debating bills that would end HAMP altogether, and presumably HAFA as well since it is a subset of HAMP.  Analysts suggest that the Democratically controlled Senate will not pass this measure and President Obama has stated he would veto it anyway.

But this all does suggest that we may see changes to this program this year.  What kind?  Who knows as these things usually make no sense to those of us who are actually in the field as they are written by others who are not.

Other changes w have seen as of late are more and more lenders being proactive and reasonable.  Reasonable?  I have not said that word about a lender in quite some time.  Unfortunately these instances are more rare than common, but we have been seeing them more.

Lenders such as Chase, Bank of America and HSBC have been implementing programs along the same lines as HAFA and offering the sellers money at closing at a full release of liability, the 2 major benefits that HAFA offers.

So if we are all lucky, more of that this year would be nice.  The one down side to these programs is that unless the loans are Fannie Mae or Freddie Mac owned, commissions are often capped at 5%.  I guess we can't have it all.

Stay tuned for future updates as things continue to change.

Sean Wilder

PS.  If you our your client are considering working with us to process your short sale, check out what others have said about us on my Linked in Page by clicking the icon.  View the full profile and scroll down to the bottom to see our recommendations.