RealTown's RealTalk

Jack says:

Although my legal name is John, I have been Jack all my life ;-)

Sorry Jack. Old mind, long night…

Mack and Andi Durbin, Brokers
Rooftop Realty
Serving Metro Denver since 1976
303-881-8844
www.rooftoprealty.com
Visit our blog at www.rooftopviews.com
30 years of doing whatever it takes

Unfortunately, in Colorado the DRE has issued a new rule as follows:

"an individual negotiating a loan modification must be licensed as a mortgage broker"

The DRE in Colorado is clarifying this to say that real estate brokers (single licensing state) who are assisting sellers in a foreclosure or short sale are not required to be licensed as mortgage brokers so long as they are helping the seller to dispose of the property.

Curtis wrote:

I just wanted to clarify for those in Colorado.

Andi Durbin said:

Unfortunately, in Colorado the DRE has issued a new rule as follows:

"an individual negotiating a loan modification must be licensed as a mortgage broker"

The DRE in Colorado is clarifying this to say that real estate brokers (single licensing state) who are assisting sellers in a foreclosure or short sale are not required to be licensed as mortgage brokers so long as they are helping the seller to dispose of the property.

So Andi, go ahead and help homeowners out! Remember that if you are going to assist people you will want to include that in your business plan so that you can measure the amount of time you have available to spend on it, and the success you are having with it.

I believe if you will look at the entire post, I indicated that this rule was not to be used for those brokers who were negotiating short sales or foreclosures with a lender. As I indicated in the original post, only if you are trying to negotiate a loan modification without sale of the property does this rule come into play.

As others have asked, I have an email into a real estate attorney to find out the opinion if this rule would be applicable if you took no fee for trying to assist in a loan modification without sale of the property. I'll keep you advised.

Mack and Andi Durbin, Brokers
Rooftop Realty
Serving Metro Denver since 1976
303-881-8844
www.rooftoprealty.com
Visit our blog at www.rooftopviews.com
30 years of doing whatever it takes

Steele asks:

Unfortunately, in Colorado the DRE has issued a new rule as follows:

"an individual negotiating a loan modification must be licensed as a mortgage broker"

The DRE in Colorado is clarifying this to say that real estate brokers (single licensing state) who are assisting sellers in a foreclosure or short sale are not required to be licensed as mortgage brokers so long as they are helping the seller to dispose of the property. However, if the homeowner is not selling the property, then the Loan Modification rule does apply.

A bit confused here. A shortsale or deed in lieu is helping the seller to dispose of the property. But a loan modification is not. That person stays in the house. Nothing is disposed of. So wouldn't you need a mortgage broker license if you offer this service?

Andi responds:

OK, here is the answer from the Colorado DRE and from Oliver Frascona, nationally known real estate attorney and also Colorado Association of Realtors Educator of the Year:

The exact question was:

If a real estate broker, not licensed as a mortgage broker, negotiates a loan modification for a homeowner who is not selling the property, AND DOES NOT COLLECT A FEE OF ANY KIND, are they still subject to the new Loan Modification rule?

Answer from both Oliver and the DRE:

The answer is YES

The fee is not the issue, it is the service and the extent of the license

So, as I originally stated, Jack can provide this service for his neighbors in CA, but in CO we cannot.

Again, please note, I am not talking about short sales or foreclosures, I am talking about loan modification for a homeowner who intends to stay in the property.

Andi

Mack and Andi Durbin, Brokers
Rooftop Realty
Serving Metro Denver since 1976
303-881-8844
www.rooftoprealty.com
Visit our blog at www.rooftopviews.com
30 years of doing whatever it takes

Andi states:

If a real estate broker, not licensed as a mortgage broker, negotiates a loan modification for a homeowner who is not selling the property, AND DOES NOT COLLECT A FEE OF ANY KIND, are they still subject to the new Loan Modification rule?

Answer from both Oliver and the DRE:

The answer is YES

The fee is not the issue, it is the service and the extent of the license

So, as I originally stated, Jack can provide this service for his neighbors in CA, but in CO we cannot.

Again, please note, I am not talking about short sales or foreclosures, I am talking about loan modification for a homeowner who intends to stay in the property.

Jack adds:

Ollie Frascona is certainly an expert on the subject of CO real estate law. Regards to Ollie.

I think this has gone a little far afield. I have not suggested that anyone actually provide direct negotiation on the homeowner's behalf. I do suggest that many troubled homeowners have little or no understanding of the process of getting a modification or have any idea where to start.

Most of the assistance I am giving is to provide links to sites of information on how to avoid foreclosure (e.g. FHA's Hope for Homeowners), names and numbers of local nonprofit organizations who are actively negotiating on borrowers behalf and links to information on the Internet that give some understanding of how to avoid scams while trying to find a solution to the problem.

One very important task that comes into play is to actually give them hope. Often they are at a point of despair and have resigned themselves to an inevitable foreclosure. When they learn that there might be a way to keep this from happening, it is like a light was turned on.

I do not, however, feel that I am the best qualified to negotiate on their behalf. That is likely best left to the nonprofits and government agencies who are now set up to do this.

This brings up a good point:

Since my objective is to help the homeowner without an eye on the commission, I have no problem pointing them to others who will best serve the need. I have no reason to try to control the process, such as I might if there were a fee involved.

So, with regard to Colorado, I am pretty sure that the services I am providing can also be provided by a broker in Colorado without penalty.

Best

JackH