New short-sale contracts upsetting Realtors | HeraldTribune.com

New short-sale contracts upsetting Realtors | HeraldTribune.comNew short-sale contracts issued by two of the largest banks in the country are causing concern in the local real estate community.

Facts
Contract excerpts
Excerpt from the Wells Fargo short sale affidavit:

Each of the signatories hereby certify and affirm under penalty of perjury that:

1) The sale of the mortgaged premises is an "arms length" transaction between two parties who are unrelated by family, marriage or commercial enterprise.

2) There are no agreements, understandings or contracts relating to the current sale or subsequent sale of the mortgages premises that have not been disclosed to the lender.

3) None of the signatories have knowledge of any offer to purchased the mortgaged premises for a higher price than the purchase price contained in the real estate purchase contract,

4) The property will not be sold within 90 days of the closing date.

Excerpt from the Bank of America short sale addendum and listing agent certification:

Sellers, buyers and broker hereby agree as follows:

1)The parties acknowledge and agree that this short sale transaction will not constitute appraisal fraud, flipping, identity theft and or straw buying.

2) The parties acknowledge and agree that any misprepresentation or deliberate omission of fact that would induce the Bank of America ... to agree to a short sale payoff which would not have been approved had all the facts been known, constitutes short sale fraud and may subject the responsible party to civil or criminal liability.

3) Brokers and acknowledge and agree that there are no dual representations ... defined as a single agent representing both the buyer and the seller.
The contracts, which were issued by Bank of America and Wells Fargo, ask real estate agents to certify -- under penalty of perjury -- that the short sales they are conducting are "arms length" and that the properties will not be resold within 30 to 90 days of closing.

The object of the contracts, according to Sarasota attorney Evan Berlin, is to protect banks against what has become known as "flopping" -- a form of mortgage fraud in which real estate professionals get banks to accept low-ball prices for properties in some stage of foreclosure and quickly resell them at higher prices.

Though real estate agents acknowledge flopping is a legitimate concern for banks, they see the new contracts as another way in which banks are shifting more of the financial burden and liability of making sure mortgage fraud does not occur onto them.

"The contracts put extra pressure on Realtors to do due diligence and could have a chilling effect on legitimate flip transactions," Berlin said.

Diane Christner, an agent with Realty Executives Solutions who is no fan of floppers, said the same thing.

"A lot of the best buyers for these homes are investors," Christner said. "Their purpose is to buy them in their current condition, fix them up and resell them for a profit. If banks wanted to foreclose and rehab them themselves, they could. But how long would that take and how expensive would that be?"

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