I just got a long explanation from a local Title Attorney explaining his interpretation of the Safe Act and why he believes that it prohibits anyone without an N.M.L.S. license from working on a Short Sale.  Anyone else hear anything about this or have thoughts on it?

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Haven't heard about it yet myself. Its probably a state thing, but I would love any details, as we try to keep up with stuff nationally as much as possible.

What is an "NMLS" license?
Mike~NMLS stands for Nationwide Mortgage Licensing System and, IMHO, is an outgrowth of the Big Boys (BOA, Wells, Chase, etc) attempts to stamp out competition in the form of the smaller shops. So, as per the terms of the S.A.F.E Act any originator who works for one of the smaller shops has to pass a killer exam in order to register with NMLS. Originators for the big boys are somehow exempt. The S.A.F.E Act is national but each State gets to interpret it apparently.
Hi Joy!

In GA, the S.A.F.E. act prohibits anyone without a N.M.L.S. license from negotiating changes to loan terms or originations. However, facilitation of short sales does not fall into this category if we're purveyors of information to the lender on behalf of the client. We do NOT negotiate loan terms in GA.
Hi Vanessa~
That was my understanding of the S.A.F.E. act also. It was further my understanding that since real estate agents are acting as facilitators or conduits of information in a short sale situation rather than as negotiators of loan terms, we do not fall under the act.
However, it was this attorney's view that the State of New Hampshire Banking Commission interprets it differently and feels that if anyone without an N.M.L.S. license communicates with the homeowner's lender in any way that results in the lien being released or the deficiency being forgiven that it qualifies as "negotiation of loan terms" and is therefore a violation of the S.A.F.E Act and places that individual in danger of prosecution.
Personally, I find it hard to believe that the New Hampshire Association of Realtors legal team has been sleeping for the last two years, which they must be if this attorney is correct. Because there certainly have been no warnings from the State level.
I have a query in with them. I'll let everyone know what they say.
Vanessa, you are correct. Real estate agents should be sure of the law in THEIR state. The Real Estate Brokers Q&A located on Georgia's Deparment of Banking and Finance make it pretty clear that real estate agents CANNOT negotiate short sales in Georgia http://dbf.georgia.gov/vgn/images/portal/cit_1210/32/5/159093506Rea...

The danger in "facilitating" or simply providing information is "where is the line"? Georgia law is unclear, but, generally speaking, if an agent asks for something or provides any type of opinion, DBF could consider that as negotiating.

I have been told by attorneys in some other states that their banking and financing departments interpret their respective acts similarly.
Sound like an attorney bogarting your short sale business...:)
You know, you might think so but this attorney is with a local title company that stopped negotiating short sales for real estate agents and their clients because of their interpretation of the S.A.F.E. Act.
This might depend on the state you are in. California first said you needed the nmls, but now they have reversed and say it is not necessary.

Joy,

NHAR came out with some "clarifications" - LOL Leaves me with more questions, but the way I interprest this you can still negotiate short sales as long as it's NOT ON THE HOMEOWNER'S BEHALF.

http://usmfiles.s3.amazonaws.com/php8ZAxZl/Article%20-%20SAFE%20Act...

 

At the same time, however, a person will not be deemed an originator if they

perform ”real estate brokerage activities,” are licensed or registered in accordance with

applicable state law to perform such activities, and do not receive compensation from an

originator or mortgage broker or banker in connection with a mortgage.4 Real estate

brokerage activities include, but are not necessarily limited to, the following:

1.) Acting as a real estate agent or real estate broker for a buyer, seller, lessor, or

lessee of real property;

2.) Bringing together parties interested in the sale, purchase, lease, rental, or

exchange of real property;

3.) Negotiating, on behalf of any party, any portion of a contract relating to the

sale, purchase, lease rental, or exchange of real property other than in connection

with providing financing with respect to any such transaction;

4.) Engaging in any activity for which a person engaged in the activity is required

to be registered or licensed as a real estate agent or real estate broker under any

applicable law; and

5.) Offering to engage in any of the following capacities.5

”Nevertheless, based upon the broadly worded statutory language, REALTORS must be

careful when handling short sale transactions to not negotiate with the lender on the

property owner’s behalf.”

 

I guess they believe if you are a conduit, then it's ok.  I think from now on I will check a "facilitator" rather than represent the client on my listing agreements.  That should cover it.

Who wrote this and where did it come from?  There is nothing there that indicates it came from the NHAR.

Bret, I'm not just posting random things

Go here http://www.nhar.org/member-services/legal-committee-resources/poten...

 

Scroll to bottom of page and click on PDF

That's really interesting Smitty.  How did you find out about the existence of this "Clarification" paper?  The reason I ask is because I receive updates from NHAR all the time (which I actually read...LOL) and, obviously this issue has been at the top of my radar.  Yet I did not see this.  Also, I think it's interesting that the date of the pdf is : Article - SAFE Act and Short Sales - 2010.10.pdf.  October 2010.  

After I originally posted here on October 19th, I contacted Matt Johnson at NHAR.  Here is his response to me on October 21st:

"This is an excellent question.Frankly NHAR and I have been struggling with this issue for quite some time. NHAR has not published any information on the topic because there is no clear guidance from the State on how they would apply the SAFE Act to Realtors.  We have tried to get some but have been unable to get it from the State.The act really was not intended to target Realtors and I am aware of no enforcement emphasis towards Realtors. We have also tried to get guidance from NAR but they do not have any.

The issue is whether a Realtor is participating in a loan modification when the agent is involved in a short sale. The best advice that I can give you currently based on what we know is that you should make sure to do nothing more than relay information from the seller to the lender and back. You should not negotiate with the lender over the amount the lender would accept or any other terms of the lender decision whether to accept the short sale proposal. You need to be nothing more than a conduit of information back and forth. You also need to be careful not to give advice to the seller about negotiating with the lender or trying to modify the loan. Your job must remain as a Realtor to do your best to obtain the highest possible sale value and once you have a contract or offer in place to provide that information to the lender or preferrably the seller to give to the lender and then have the lender decide what it plans to do. I know that you and many others will probably view this advice unrealistic but other than deciding not to participate in short sales at all, this is the best guidance I can provide as to how to protect yourself. Normally, I would suggest that another step would be to advise the seller that they need an attorney. I still believe that the seller is better off with an attorney but attorneys also are not exempt from the Safe Act so they are limited often in what they can do on behalf of a seller as well.
NHAR is continuing to look into this issue. If we can obtain any better clarity from the State such that we can provide more definitive advice then we will publish guidance."

He must have finished writing this email to me and then written and posted the "Clarification"....LOL

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