Georgia deeming it illegal to represent sellers for a short sale any longer!

I was just forwarded an email from one of the Top Real Estate attorneys here in Georgia that says they will no longer be processing short sales because it is now illegal for them or the agents to do so without a loan originator license! See copied email below. Has anyone else heard about this? The last I heard we had won this battle and it is legal. I don't know what to make of this. :-(

We have just been informed that the Georgia Department of Banking and Finance’s current interpretation of the law is that law firms may no longer provide short sale assistance to sellers.  The Department is taking the position that law firms cannot do this work without being licensed as a mortgage loan originator.  We, nor any other law firm, are so licensed.


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Comment by Donna Schorr on August 21, 2013 at 2:48pm

In WA and OR you need a debt management license IF you are doing SS for a FEE other than just commission. If you are only taking a standard commission then no add'l license is required. Agents can do shorts "in the regular course of real estate business" but cannot market as having the ability to stop a foreclosure. 

Comment by Patti Lyles on August 21, 2013 at 11:02am

Thank you all for taking the time to report your findings.

Comment by Neil Blumberg on August 20, 2013 at 9:12pm

That's very strange! Here's a link to the Kentucky Association of Realtors, which contains a link to the FTC site, both of which confirm that, with almost no restriction, real estate agents can represent sellers in short sales. This MARS battle was hard fought by the NAR which did a great job on our behalf. In Kentucky there is no doubt that we are able to assist sellers in obtaining short sales. The prohibition against assisting with other types of mortgage issues, such as loan modifications etc, is still prohibited for real estate agents. I would be very surprised if the information you've received is correct. I'll be following the comments on this topic with interest......

Comment by Paul Antonelli on August 20, 2013 at 6:18pm
New Rules For Short Sales
by Benny L. Kass
Negotiation of a short sale deficiency agreement or any other type of mortgage collection forbearance with a seller's mortgage lender is not within the scope of a real estate license. This is the decision of the Maryland Real Estate Commisison, and accordingly there are now new rules governing how Maryland real estate agents can handle short sales. Such a determination by other State Real Estate Commissions could impact agents and brokers all over the United States.
 Here's the Maryland background. On May 16, 2013, Governor Martin O'Malley signed into law the Maryland Mortgage Assistance Relief Services Act. Commonly referred to as MARS.
That law - patterned after the Federal Trade Commission's MARS Rule - is designed to protect homeowners in financial trouble. Whenever the economy falters, predators come out to prey on unsuspecting and worried homeowners by offering false mortgage relief services.
The FTC rule specifically prohibits any mortgage relief company - which now could include Maryland real estate agents - from collecting any fees until they have provided the homeowner with a written offer from their mortgage lender that is acceptable to the consumer. Additionally, anyone engaged in mortgage relief must disclose such matters as (1) they are not associated with any government, (2) the lender may not agree to the proposed plan, and (3) if the homeowner is told to stop paying the mortgage, they must also be told that they could lose their home and damage their credit rating.
Short sales are included in the definition of "mortgage relief", since the home is sold for less than the balance owed on the mortgage and the lender agrees to accept the sales proceeds. Two years ago, however, the FTC announced that it would not pursue the provisions of the Federal MARS rule against real estate brokers engaged in short sales, if they are licensed and in good standing under state licensing requirements.
The new Maryland MARS act changes this. The Maryland Commissioner of Financial Regulations - the agency authorized to enforce the law - has determined that "negotiation of a short sale deficiency agreement or any other type of mortgage collection forbearance with a seller's mortgage lender" is not within the scope of a real estate license.
"As short sales have become more prevalent," said Steven Long, Assistant Executive Director of the Maryland Department of Labor, Licensing, and Regulation, " questions have arisen as to which parties may provide assistance in executing short sales and how those parties may be compensated."
Maryland real estate agents may enter into contracts with a homeowner to market their house for a short sale, and may conduct a comparative market analysis (referred to as a Broker's Price Opinion). However, there are a number of restrictions and conditions.
On July 22, 2013, the Maryland Real Estate Commission issued guidelines for handling short sale transactions. Agents will have to comply with the MARS Act if they do any of the following:
  • collect any moneys in addition to the customary commission;
  • assist a seller in negotiating with the lender to obtain approval of a short sale;
  • represent to the public that they are "experts" in short sales;
  • make representations that they can obtain a short sale;
  • provide advise regarding the benefits of a strategic default, or
  • make predictions with regard to the likelihood of a deficiency or the payment of relocation costs involved in a short sale.
Does this also impact real estate agents other states? Unless the Federal Trade Commission changes its decision, they will not enforce the federal MARS act. However, all agents must take note of the decision by the Maryland Real Estate Commission that involvement in many aspects of short sales is outside the scope of the real estate license.
Accordingly, all real estate agents - wherever they are located - should comply with the various requirements of the MARS rule. For more information on the Maryland act (; and on the MARS Rule (ftc.shortsale).
Published: August 13, 2013
Comment by Tracie Norman on August 20, 2013 at 4:13pm

And per Rod with Georgia Department of Banking, Attorney's CAN negotiate short sales or any other financial matter on behalf of their CLIENTS.  They must have a client relationship with the Seller in order to do so, but they can do it.  

Comment by Ben Benita on August 20, 2013 at 4:01pm

Georgia - I just got off the phone with Rod at the Georgia Department of Banking (he asked that I NOT put his last name or contact info. on here as he has been FLOODED with calls over that email), and he confirmed:

"Agents CAN process short sales, but can not "negotiate", no special license or anything required."

There is NO new legislation and nothing stopping an agent, or attorney, from processing short sales.

He also confirmed that email that went, as stated before, the ENTIRE thing was inaccurate and incorrect and that it has caused a HUGE stir for his office (he wasn't too crazy about it).

If you would like to contact him directly with questions, email me at and I will tell you his last name and phone number (again, I would respectfully request you NOT post it here so he does not get flooded with calls).

I also spoke to the people at the attorney's office and I too was under the impression they just want out of short sales so they need not expose themselves to any liability.....again, just my best guess!!!

Keep kicking butt guys, you need help, CONTACT ME!!!!

Comment by Ben Benita on August 20, 2013 at 3:54pm

Maryland - as of July agents CAN process short worries and no credit license is required

Comment by Sonia Shanahan on August 20, 2013 at 3:47pm
I think the attorney just doesn't want to process the short sales anymore! The email was very misleading! I have informed the source of the email that the legislature exempts re a l estate agents as Long as we aren't charging a separate fee. I appreciate the clarification from Eileen!
Comment by Mike Linkenauger on August 20, 2013 at 3:24pm

And to confirm what Paul Antonelli said below, yes, Maryland has been CRAZY as well.  A well known agent who we work with who was on our cruise recently had to cancel his short sale website, as he swears he basically can't do short sales anymore!! Again, that is in Maryland.

I want CASE LAW.  Legal opinions quiet frankly are worthless in my opinion.  Show me a State where they have definitely deemed it illegal through action.  Another attorney's opinion about this matter has ZERO value. We have been hearing this garbage for years, especially in Georgia.

Comment by Eileen W. Smith on August 20, 2013 at 3:11pm

The Georgia Residential Mortgage Act, Article 13, pertains to the licensing of Mortgage Lenders, Mortgage Brokers and Mortgage Loan Originators.  It specifically addresses "exemption for certain persons and entities; registration requirements" for the facilitation of short sale transactions.

Licensed Realtors ARE allowed to do so, as long as they do not receive "a separate fee" for doing so.  Attorneys are not, and it appears most other persons other than a loan officer or the homeowner themselves are prevented from doing so in the state of Georgia.

The GRMA can be found at:



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