The "Real Story" on Short Sales

With the exit of a few big firms from the short sale facilitation arena, they have not only left a hole in the market, but they’ve also allowed for some terrible misconceptions to spread across our profession.

Unfortunately, the reasons these firms gave out as to why they have stopped short sales have caused lots of misinformation to circulate. Here is the “THE REAL STORY” as to what the law for facilitation is.

The Law as of today:

Exemption for Real Estate Broker/Agent - Section 7-1-1001 was amended to add subparagraph (6) below went into effect July 1, 2013:

(6) A real estate broker or real estate salesperson not actively engaged in the business of negotiating mortgage loans; however, a real estate broker or real estate salesperson who directly or indirectly negotiates, places, or finds a mortgage for others shall not be exempt from the provisions of this article;

Exemption for Attorneys still in effect - Section 7-1-1001(5) HAS NOT CHANGED as of August 19,2013:

(5) A licensed attorney who negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney's representation of the client, unless the attorney is compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent of such lender, mortgage broker, or other mortgage loan originator;

There has also been concern that the Georgia Department of Banking and Finance (DBF) has changed its position and interpretation. That is simply not correct. You may search the DBF website for the only change relative to short sales --- which is the addition of (6) above. It is my understanding that DBF has been providing telephonic and email clarification since this became a hot topic back in August.

However, the operative word other law firms are hanging their hats on is “negotiating”. The law firms still doing facilitation, including Dickason Law Group, only facilitates the flow of information from the seller to their bank pursuant to the attorney’s role in title clearance. They do not represent the seller and they do not negotiate anything. This role has been reviewed and approved by Rod Carnes, the head of the Georgia Department of Banking and Finance. Dickason Law Group now has 9 full time facilitators, a dedicated closing team with 3 closers, and an account manager specifically for short sales. The existing firms doing facilitation without negotiating view the exit of the larger firms as an incredible business opportunity.

This is the DBF site with it's Mortgage Law and Rules:

http://dbf.georgia.gov/mortgage-laws-and-rules

The only change in the law with respect to short sales is the addition the amendment providing an exemption to real estate agents.  See DBF site:

http://dbf.georgia.gov/sites/dbf.georgia.gov/files/related_files/document/ChangestoGRMA-2013LegislativeSession.pdf

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