Colorado Brokers - Beware!
In today's market, we all have to know something about the foreclosure process. Many of us know more than we ever wanted to know. LOL
One of the designations that has interested me lately is the Certified Distressed Property Expert (CDPE). The way they teach to deal with a distressed property is completely different than the way you've handled regular residential home sales. Perhaps you all have more knowledge about this designation than I do, and I offer this forum to share that knowledge with all, please.
But what we, in Colorado, need to be aware of is our Director of the Colorado Division of Real Estate, Erin Toll, has recently set down a new law or regulation for us to follow. We are no longer allowed to negotiate with our client's mortgage holder to restructure their loan to keep them in their house! It seems that if we do, we can loose our license.
I just heard of this today and in time, the bulletin will cross our desks. Until then, be very careful!
Here's a follow up to this post:
Important Message from Bob Golden at CAR
Dear CAR Director:
As you know, there has been considerable confusion relating to the Division of Real Estate’s position statement on short sales/loan modification and the impact on real estate brokers. We have been in contact Division and requested a clarification and anticipate a statement from them within the next few days.
In the meantime we have asked CAR Legal Counsel Dick Clark for his interpretation which is shown below. We encourage you to distribute this information to your members and leadership. Once we receive additional information from the Division of Real Estate we will forward it to you.
The Colorado Association of REALTORS®
(Note: this information is also available on the CAR website)
Clarification of DRE's Position Statement and Short Sales
On November 19, 2008, the Colorado Division of Real Estate issued Position Statement MB1.5 which among other things reiterated the requirement that an individual negotiating a loan modification must be licensed as a mortgage broker under C.R.S. 12-61-901 et. seq. Given the confusion and concerns among REALTORS® relating to handling short sales, CAR has discussed the Position Statement with the Division of Real Estate and obtained a clarification. Additional clarification from the Division is expected.
The clarification is that the Position Statement does not pertain to real estate brokers working for a seller in a short sale situation even when the real estate broker communicates with the mortgage lender in efforts to extinguish the loan. The rationale is that in a short sale the real estate broker is working with the seller to help that seller exit the home, not modify the loan so that the seller can stay in the home. Also, in a successful short sale, the original loan is usually extinguished and there is not a modification to the mortgage. CAR anticipates that the Division of Real Estate will issue a clarification in the next few days.
REALTORS® are reminded that the real estate broker short sale exclusion from mortgage brokerage licensing does not apply if a homeowner engages a real estate broker to seek a loan modification, as opposed to a sale of the home. Also, a REALTOR® not licensed as a mortgage broker should never seek or receive compensation from an owner for obtaining a loan modification. In a short sale the REALTOR'S compensation should be the real estate commission earned and paid at closing.
Marianne Snygg, GRI, ABR, ASP
ERA Herman Group Real Estate
Colorado Springs and Monument Real Estate