What’s the News?
Tower Mortgage Corp launches a short sale negotiation service to benefit homeowners and Realtors® with listings of properties needing a short sale.
Why is Tower getting into the Short Sale business?
Up until recently, real estate agents and closing attorneys handled most of the short sales. However, the Georgia Department of Banking and Finance has taken the position that (a) real estate agents can’t negotiate short sales, and (b) a closing attorney can’t negotiate a short sale on the buyer’s loan because the closing attorney represents the buyer’s lender – the attorney can’t be on both sides of the transaction.
Who can negotiate Short Sales in Georgia?
Pursuant to Georgia law it is prohibited for any person to directly or indirectly solicit, process, place, or negotiate mortgage loans for others, or offer to solicit, process, place, or negotiate mortgage loans for others, without a mortgage license, or pursuant to an exemption from licensure. According to the Department of Banking and Finance, this includes negotiating short sales.
Can a real estate agent, broker or Realtor® negotiate short sales?
No. A real estate agent may provide information about a seller to a lender and vice-versa, but they cannot negotiate or advocate for the short sale.
Can a closing attorney closing a buyer’s loan negotiate a short sale on the seller’s loan?
No. In Georgia, the closing attorney represents the buyer’s lender. The closing attorney cannot also negotiate the seller’s short sale because an attorney cannot be on both sides of the transaction. An attorney retained by the seller and paid by the seller might be able to negotiate a short sale. Georgia Statutes O.C.G.A. § 7-1-1001(a)(5) provide an exemption that allows a Georgia licensed attorney to negotiate a short sale as an ancillary matter to the attorney’s representation of the client, suggesting for example, that a bankruptcy attorney would be able to negotiate a short sale for a bankruptcy client as such work would be ancillary to the bankruptcy engagement. However, it is not clear if an attorney could be retained for the sole purpose of negotiating a short sale.
How long has Tower Mortgage Been in Business?
How will Tower Mortgage Short Sale Work?
The property must be listed with a listing agent and the listing agent must collect all the paperwork and seller’s financial documents before TMSS will start work. TMSS will pursue the entire short sale negotiation process and obtain the Short Sale Approval Letter (if obtainable) from the selling lender(s) and then provide that letter to the listing agent and closing attorney.
What is the success rate?
95% of completed files are anticipated to close successfully. However, it should be understood by all parties that TMSS cannot guarantee success. A lender may voluntarily accept or refuse to accept a short sale.
What paperwork does TMSS require?
TMSS has a simple cover sheet that the listing agent completes upon delivery of the short sale package to us. Listing agents are encouraged to continue to use the Short Sale Addendum and paperwork currently provided by your broker.
Will you support agents with the CDPE designation?
Do you have an online tool for file management and 24/7 access to updates?
Are there any requirements for submission of the short sale to you?
Yes: (1) The property must be listed by a licensed Georgia Realtor® and the listing agent must obtain all short sale paperwork and financial package information from the Seller, the sales price must be $100,000 or more, and each of listing agent and selling agent must agree to split a commission 50/50 that may be as low as 4%.
Are there any upfront fees, costs or subscriptions to use Tower Short Sale?
How does TMSS get paid?
TMSS will receive a maximum of 1% from each of Listing Agent and Selling Agent on the HUD at closing provided that both Listing and Selling Agents receive a minimum of 2% commission each in the event that the lender crams down the total allowable commission. For example, if a lender allows a 6% commission, then 2% will be paid to each of the listing agent, selling agent, and TMSS. If a lender allows only a 5% commission, then 2% will be paid to both listing and selling agents, and TMSS would receive only 1%.
What are my responsibilities as a listing agent?
- Obtain the listing, provide information to your client, explain options, and assist your client in their coming to a decision to pursue a short sale if such a decision is in the client’s best interest.
- Manage Seller’s Expectations: a short sale is something that we can try, has a high likelihood of working out, but is ultimately up to the lender and there is a possibility that it will not work out.
- Collect the Short Sale paperwork and financial package from Seller and submit to the TMSS.
- Find a Buyer and obtain a Purchase and Sale Agreement. Buyer must be arm’s length third party purchaser with verifiable proof of funds.
- Provide access to the property for the BPO.
- Assist with transactional and logistical matters as in any other closing.
- Deposit your commission check.
What are TMSS responsibilities?
- Submit short sale package to the lender (including Equator)
- Handle all communication with the lender.
- Request and schedule the BPO.
- Negotiate with the lender.
- Negotiate any junior liens.
- Note all activity in the online tracking system.
- Get approval letter(s).
- Coordinate Short Sale information and approvals to closing attorney.
- Be a resource and guide for you and provide regular updates to you throughout the process.
Can you do multi-units or commercial properties?