MAR Legal Counsel- Short Sale, Foreclosures and Commissions  

For agents and sellers

Greg McClelland, Michigan Association of Realtors General Counsel, spoke today about Short Sale, Foreclosure and Commission issues.

Ever go tot he court to find foreclosure records?  The records may not be there.  In MI foreclosure can happen by advertisement with out court supervision.  The property is also posted with "Notice of Foreclosure".

Always-always have a title company run pre-commitment.  The pre-commitment will tell you how many mortgage and what mortgages are on the property.

Michigan redemption (abandonment) period is 6 months.  If the home is abandoned, the period can be shortened to 15 days. 

A myth:  2nd and 3rd mortgages go away after the sheriff sale.  This is a myth.

Before you list a short sale, the following paper work must be done and sent to the Loss Mitigation Department:

• Hardship letter
• Financial statements
• Market Value
• Settlement statement

Bank will never tell you what they will accept.  Just take offers until they get one they like.  If the bank doesn't sign the short sale Purchase Agreement, the Purchase Agreement should state, "Subject to Lenders Approval".

Can agents in anyway get the bank to respond quicker?  NO

If the agent or broker doesn't follow through on a sale because the commission is cut, the agents / broker is in violation of Fiduciary Responsibility and can be sued!  At closing, each broker should sign a commission agreement to avoid further action.  According to Greg, once the agent accepts the commission at close, there is no more recourse.  Some brokers attempt to get commission from the listing company, that only caused hard relationships later.

A buyer's agent does not have to show REO properties as long as they explain to the buyer why.

CASH FOR KEYS!!  This is a new practice with lenders.  The lender themselves will approach the home owner.  The lender will ask the homeowner to get estimates for renting an apartment and moving van expense.  Lenders will send the homeowner a check for the move in return for the keys.  If you have the listing, make sure you advise your client smartly and ethically.  Don't get sued!