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Tag Archive: Short Sale
MARS Update – July 2011
Big news on the MARS Short Sale front this week, both from the ADRE and the FTC. We’ll probably hear more from ADRE once the Federal announcement gets digested.
Here’s an excerpt from the ADRE bulletin earlier this week.
Here’s what the FTC had to say.
So what do these announcements mean to the agents negotiating short sales in Arizona? My initial take is no more disclosure forms or announcements on web sites or other forms of advertising. For John Hall agents that means all forms 1, 2, 3a and 3b are no longer required. 1 is the advertising form for ads and web sites. 2, 3a and 3b were for short sale listing transactions. Again the MARS forms are no longer required at John Hall & Associates. Removing the ban on advanced fees might be a little trickier. Is it regulated by state statute or by the FTC? That’s why I think we will hear something from ADRE in the near future.
ADRE did clarify their interpretation on 2 agents from the same company working a short sale and teams having multiple agents including a specific short sale bank negotiator and whether they need a loan originator license or not. It’s contained in the 4th and 5th questions in the article. We’ll be talking about these changes at the office meetings coming up, so check us out on Tuesday in Scottsdale and 7/26 in the PV office.
Stay informed and practice real estate the right way.
Freddie Mac Short Sale Addendum
Have you seen the changes made to the required Freddie Mac Short Sale Addendum? They’ve recently added three “agents/parties”; seller’s agent, buyer’s agent, and escrow closing agent. All three are required signatories to the addendum.
Previously the buyer and seller had to acknowledge and agree to things like;
- it’s an arm’s length transaction,
- there are no agreements that haven’t been disclosed,
- misrepresentation may subject the parties to civil and/or criminal liability,
- there is no appraisal fraud, flipping or straw buying.
Now the real estate agents and escrow agents are also ‘acknowledging and agreeing’ to these conditions. In addition, there is a new paragraph that creates huge liability issues for the parties that sign this addendum;
13. Each signatory agrees to indemnify the Servicer and Freddie Mac for any and all loss resulting from any negligent or intentional misrepresentation made in the affidavit including, but not limited to, repayment of the amount of the reduced payoff of the Mortgage.
“Negligent or intentional misrepresentations made in the affidavit”…. What does that mean? Or better yet, who has seen these affidavits? Earlier in the addendum it states that “‘the Servicer and the Investor are relying on statements made in the affidavits as consideration for the reduction of the payoff amount.” These statements are made by the seller, but who has seen these affidavits? Has the buyer, buyer’s agent or escrow closing agent been given a copy of the statements and the documentation to verify that the seller’s statements are true? Probably not. So how can they “indemnify the Servicer and Freddie Mac for any and all loss” based on a seller’s statement that they haven’t seen or have no knowledge of?
Oops – I probably should have started with…
I’m not an attorney. I do not play an attorney on TV. This is not legal advice. My broker advice is to advise your clients to get legal advice concerning this document.
My advice to John Hall agents being asked to sign this form as a buyer’s agent is to “Just Say No!” Don’t be surprised if you find more and more title companies declining to sign also.
MARS Disclosure Update – 5/4/11
Hot off the presses…all the way from MARS!! Here’s the update we’ve all been waiting for…or not?
From:
K. Michelle Lind, Esq.
General Counsel/Asst. CEO
ARIZONA ASSOCIATION OF REALTORS®It appears that we made the right call regarding advising our members to continue to comply with the MARS Rules. Below is an email that I just received from NAR attorney, Finley Maxson:
“We have heard back from the FTC, and there is good news and bad news.
The good news is that the FTC continues to agree that the parts of the rule do not make sense in a real estate brokerage context. The FTC has said that they are working on a solution that they will inform us of “in a few weeks” (not sure what that means in actual time).
The bad news is the FTC pulled out of our Midyear forum, has decided not to release modified disclosure language, is not endorsing our Q&A, and is taking the position that for right now, real estate professionals need to comply with the rule as written. We will release a modified version of the Q&A early next week on realtor.org.
We will continue to advise the members to comply with the rule as written for the immediate future, but recommend that they monitor the status of our discussions with the FTC on realtor.org.
We will continue working with the FTC and will let you know as soon as we hear from them. We remain optimistic that there will be a good outcome to this process, but it is taking longer than it should.
Please let me know if you have any questions.”
I’m glad I followed Michelle’s advice at the end of March to fully comply with all 4 MARS disclosures for the time being and wait for written retractions/instructions from the FTC themselves before changing our company’s requirements. I now need to change the forms my agents are using, to incorporate some of the ‘best practices’ I have found concerning these disclosures. Stay tuned.
Rumor Control-The Next Round of MARS changes
Tuesday the Combs Law group put out the following announcement.
Combs Law Group, P. C.
Short Sale Listings Will Not Require Mortgage Assistance Relief Services (“MARS”) Disclosures
By: Christopher A. Combs, EsqAfter extensive negotiations between the National Association of REALTORS® and the Federal Trade Commission (“FTC”), the FTC has agreed that listing brokers with short sale listings do not need to make the MARS disclosures. Listing brokers will still be prohibited from collecting advance fees.
Listing brokers who advertise for short sales, however, must comply with the MARS advertising disclosures.
If you would like more information regarding deficiency lawsuits, short sales, loan modifications, bankruptcy or other real estate related issues, please call our office at 602.957.9810 and arrange for an initial consultation with one of our attorneys.
Chris Combs
Certified Real Estate Specialist
Combs Law Group, P.C.
While it’s a great headline and welcome news, it’s premature since there is nothing from the FTC or NAR, that has been reduced to writing that describes what ‘relief’, if any, real estate agents may be getting from MARS disclosures. These FTC attorneys are the same people that start their Compliance Guide with this caveat:
This guide, which represents the views of FTC staff and is not binding on the Commission….
So in my opinion, we are waiting on the Commission to decide which part or parts of the Rules should apply or not apply to real estate agents. Remember these are also the people who have instructed us as to the definition of ‘clear and prominent’ with the following detail:
Pursuant to 16 CFR § 322.2(a)(1) “clear and prominent” means:
- In textual communications, (which includes any communications in a written or printed form such as print publications or words displayed on the screen of a Computer): the required disclosures shall be
- easily readable;
- in a high degree of contrast from the immediate background on which it appears;
- in the same languages that are substantially used in the commercial communication; in a format so that the disclosure is distinct from other text, such as inside a border;
- in a distinct type style, such as bold; parallel to the base of the commercial communication, and,
- except as otherwise provided in this rule, each letter of the disclosure shall be, at a minimum, the larger of 12-point type or one-half the size of the largest letter or numeral used in the name of the advertised website or telephone number to which consumers are referred to receive information relating to any mortgage assistance relief service.
When a written announcement is released by the FTC and NAR, I will post it immediately with the changes or modifications it will require to comply. In the meantime, real estate agents are required to comply with the ‘law of the land as it exists today, i.e. all four MARS Disclosure forms are required for Short Sale transactions after 1/31/2011.
So that’s my opinion and I’m sticking with it until it’s changed in writing.
MARS Disclosure Update
Talk about a moving target. Last week in Prescott for the AAR meetings there was quite a bit of discussion regarding short sales and MARS Disclosure requirements. A couple of the questions/comments stood out and I want to give the options to John Hall agents and others reading this post.
The MARS Form #2-“Consumer Specific Commercial Communication” is only necessary up to the point of getting the listing signed. Since the phrase ‘prospective short sale seller’ is included in the guide, once the listing is signed, they become a client and you’re done with the disclosures until the bank/servicer provides the Agreement Notice. Then you use Forms 3a and 3b as ‘cover sheets’ for the Notice from the bank.
The other common question was “What goes in the blank for what the real estate agent is going to get paid on forms 2 and 3a?” The most common answer was ‘0’, with reasons like “the seller isn’t paying me the bank is; or I’m not getting paid for Short Sale Negotiator services”. I think the safest answer is your total listing commission. You do expect to get paid for the transaction and putting ‘0’ may obligate you to work for free or maybe even come out of pocket for the co-broke commission. I did have conversations with a few brokers who were going to eliminate the blank and fill in something like ‘per listing agreement (with no additional fee for Short Sale services)’. I think that works also.
We heard that NAR was scheduled to meet with the FTC attorneys this week to clarify some questions that have come up since the MARS rules have been more widely circulated. We should hear the results of those meeting by the end of the month.
MARS Disclosure Classes and Discussions
Since I’m aware that agents want the opportunity to have the rules explained and ask questions concerning the requirements, I have scheduled some times for discussion. The Tuesday John Hall meeting at Paradise Valley 3/22 will contain a MARS presentation. Additionally I’ve been asked to conduct some open to the industry discussions and I have a few scheduled this month. They are:
1) 3/23 from 2 – 3:30 (RSVP and Class Flyer)
2) 3/29 from 9-11 (RSVP and Class Flyer)
***SOLD OUT Also on 3/28 at the Phoenix Association of REALTORS®, I’ll be speaking with Michelle Lind AAR’s Legal Counsel and Martha Appel Coldwell Banker’s Designated Broker from 9-12 and 1-4 on MARS Disclosures with a Question and Answer segment to get all issues addressed with current information. These sessions will not be for continuing education, but will contain valuable information open to the industry, both agents and brokers, as we discuss the latest developments regarding this topic. There is limited seating for all these sessions and you will need to RSVP to dleadford@paronline.com Cost = $FREE.99! (Class Flyer) SOLD OUT***
Contract Revision Classes
Also if you’d like to attend a contract class on the revisions this month, I have 2 more scheduled:
3/25 Arizona School of Real Estate and Business 9am – 1pm on a panel with Michelle Lind and Amy Swaney from the Forms Work group – for hours with a fee. (ASREB.com RSVP: 480.946.5388)
3/29 12:30-3:30 Repeat of 3/8 Sold Out class-for hours with a fee. (RSVP and Class Flyer)
MARS Disclosure Requirements in Arizona
Update: View the MARS tag for current articles.
Thanks NAR and FTC for making real estate agents Mortgage Assistance Relief Services (“MARS”) providers and requiring us to comply with the MARS Disclosures. I’m being facetious. What a mess. I’m only the messenger here to inform you that if you are the listing agent for a short sale and you are handling the short sale discussions with the lender yourself, you now need to provide 3 disclosures to the Seller advising them of your services and potential fees charged. There are many other short sale situations requiring MARS disclosures and they are ‘explained’ in the following links.
Information about MARS requirements:
- MARS requirements – 54 page document
- FTC Compliance Guide
- NAR’s pamphlet on FTC required disclosures
- DRE’s Short Sale Negotiator Regulations
- AAR’s Summary of MARS Requirements
John Hall’s New MARS Disclosure Forms
a) Disclosure 1 is for Advertising to the general Public
b) Disclosure 2 is for Agent to Seller Communication
c) Disclosure 3a is for presenting the lender’s short sale approval letter
d) Disclosure 3b is for explaining all material differences between the offer of mortgage relief and the seller’s current loan.
(AAR has generic forms on their website)
Since the FTC published MARS in December 2010 with an effective date of 1/31/2011, these requirements are currently in effect. I have volunteered to be apart of AAR’s task force to address questions regarding MARS implementation. If you have any questions for me or the task force, please post them below. In the meantime, agents involved in short sales need to comply with the MARS disclosure requirements ASAP.
Short Sale Think Tank – June 24th
What: Open Office Think Tank Meeting at the JHA Glendale office – 10 a.m. – June 24th
Who: Open Office = ALL Valley REALTORS® are welcome, not just John Hall & Associates REALTORS®
Purpose: Meeting of the “minds” of all REALTORS® who are in the trenches processing Short Sales and want to share and benefit from others’ experiences. We will discuss recent issues/successes/findings and processes. HAFA program – have you done one – is it working/not working.
This meeting is not for the faint of heart and not a “how to” for beginners. Our ultimate goal is to benefit ALL of us REALTORS® and our treasured clients. Throw out the old ideas/conceptions of doing it on your own and mucking through the mess. It’s time to share our knowledge and ideas for the common good!!
If you are not afraid or intimidated and are open to this idea contact Deidre St. Romain at deidre@johnhall.com and/or Elise Fay and efayinaz@cox.net. No vendors, no doughnuts, no coffee – bring your own and let’s learn from each other!!!
RSVP by June 21 so we know how much space we need in the office.
thank you!!!
Deidre St Romain
Goodyear REALTOR®
Short Sale Scammers Busted
Straight from this article on bloomberg.com:
Sergio Natera and Anna McElaney are scheduled to be sentenced in Hartford’s federal court in August after pleading guilty to fraud. Their crime involved persuading lenders to approve the sale of homes for less than the balance owed –known as a short sale — without disclosing that there were better offers. They then flipped the houses for a profit.
Sentenced in a Federal Court for short sale fraud! It’s nice to see that the federal government is starting to define and act on mortgage fraud.
Greater Phoenix Arizona Real Estate Market Report – May 2010
There’s a lot being written about the Phoenix Real Estate market as analysts and practitioners try to describe or predict what’s happening.
In my opinion, the market is sputtering on the price front but continues a brisk pace on a volume basis. To me any month with greater than 9000 closings is an outstanding month. May of 2010 was only the 15th month with over 9000 closings in the last 9 ½ years-that’s 113 months if you’re counting. June will probably be the 16th month with a chance of being the 4th month over 10,000 and possibly the highest month on record (The current #1 is June of 2005 with 10,252). All those ‘beat the tax deadline’ closings will motivate buyers and lenders to “get’em closed” this month.
Pendings and AWC’s continue high with 12,400 and 7700 respectively; that’s over 20,000 properties currently in escrow. Life without a tax credit won’t start until next month and then we’ll see how an unsubsidized real estate market reacts.
So to review May: 9100 closings-with only 20 business days in the month; 37% or 3350 were Bank Owned (REO’s); Short Sales (SS) accounted for 22% or 2000 closings. The real story with SS’s is the 4100 in Pending status and the 7100 in AWC status. When these 11,000 properties currently in escrow close, the percentages will have changed dramatically. Go to our blog for a Mike Orr report on Short Sales courtesy of Old Republic Title. Mike does a great job providing details on SS’s by analyzing them from both a supply and demand point of view, breaking them down by zip code. Also he compares SS’s to REO’s by price range. It’s a good report to refer to, if you have an appraiser or bank that needs information about SS’s specific to a zip code.
Another new statistical report came out this month called STAT. ARMLS provides the report and they have an advanced predictor of prices. You can get this report from your flexmls dashboard or click right here.
Also in our Real Estate Market section you will find our chart tracking Tom Ruff’s foreclosure numbers. The chart shows that New Notices of Trustee Sales are down 21% for the first 5 months of 2010 compared to 2009; Completed foreclosures are up 16% ; Pending Foreclosures are down 13% since the first of the year; and the biggest change is 70% more Cancelled in 2010 than the first 5 months last year. The current number of Bank Owned properties in Maricopa County is 16,301, which is made up of 5200 Active listings; 3850 are Pending; and the balance of 7250 are waiting to be marketed.
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