Steve Dibert, MFI-Miami

Anyone who has ever attempted to deal with Real Estate Agents or Brokers on a professional basis knows that most of them are bored housewives or retirees who think they are attorneys or finance experts because they took an 80 hour course on how to perform real estate transactions.  Mr. Rourke may have anointed them an attorney on Fantasy Island but here in the real world, the advice they give can have devastating results.

I hear horror story after horror story from homeowners who tell me about real estate agents advising them on loan modifications and short sales.   They continually tell homeowners not to make their mortgage payments.  Real Estate Agents seem to believe the propaganda from the bank when they say, “We can’t help you if your not 90 days behind.” Because of their own ignorance and their arrogance, they are more than happy to convey this to the homeowner.

Anyone with any experience in foreclosure defense know this is bullshit. Unfortunately, it appears someone forgot to tell the Real Estate Brokers.   Unfortunately, my experience has been with most Real Estate Brokers is that they feel because they took an 80 hour course on real estate transactions that they know more than a lawyer or someone who actually has a track record of keeping people in their home.

I have Real Estate Agents and homeowners who after reading about me on the internet call me 9-12 months after they begin a modification or short sale negotiation.  They call me out of  desperation because they’ve hit the proverbial brick wall with the lender and now the lender is either foreclosing or has foreclosed.   The homeowner is now weeks or days away from being evicted from their home all because the realtor had no idea what they were doing.   I then have to play Winston Wolf from Pulp Fiction to save the homeowner from being tossed on the street and the realtor from getting in trouble with either state regulators or the Federal Trade Commission.

Most realtors don’t comprehend the gravity of the situation they have created for themselves or the homeowner.   When I explain to them what needs to be done the conversation tends be like the conversation that Winston Wolf has with Vincent and Jules in Pulp Fiction.  I have to explain to them that what they are doing is unlicensed practice of law.  Sometimes I have to be curt because not only are they giving unlicensed legal advice, they are also violating the Mortgage Assistance Relief Services Rule (MARS) issued by the Federal Trade Commission and various state laws.   Some Real Estate Brokers think that because they soliciting business in other states, they won’t get caught or they are exempt from the laws of the state they are located in.   This is not true.  They are still under the jurisdiction of that state, the state the homeowner is located in and the Federal Trade Commission.

I advise them on how to protect themselves and give them advise on how to correct the situation.   They usually respond with a screaming tirade or don’t seem to care.   Usually when I receive the screaming tirade, it’s a clear indication they know they are breaking the law but are doing it anyway.   I then have to say, “Well, do you want me to save your ass, or not?  If not, good luck to you!”

But what really scares me are the response like one I received from a Real Estate Broker in Traverse City, Michigan who said, “Well, it hasn’t been a problem, yet.  So I’m not worried about it.” This guy new he was ripping people off and didn’t seem to care.

Dominick Sammarone, a New York Real Estate Agent with onlinerealty.us, a website owned by attorneys says homeowners need to remember, “Short sales are not sales for midgets.  There are no midgets dancing and singing, “We represent the lollipop bank, the lollipop bank, the lollipop bank”  and then handing you an agreement.  Short sales and modifications are not the yellow brick road to get you out of your mortgage obligation.”

Sammarone  says, “I am seeing a flood of legal advice and continuous posts on the Internet by Real Estate Brokers and agents, advising consumers what to do if they are behind in their payments. This is illegal because it’s considered practicing law without a licence. I cannot believe the “broad brush statements” being made that are confusing consumers more everyday.”

Dominick Sammarone wrote an excellent list on the Ryan & Schwarz website of the bullshit he hears Real Estate Agents tell people on sites like Zillow, Trulia, and their own blogs:

1. Do a short sale instead of a foreclosure – (without looking into their other debt. For example, credit cards and second mortgage leins)

2. Stop making mortgage payments so you can qualify for a HAFA short sale.

3. You can live in your home for 2 years or more!

4. Don’t hire and pay an attorney to do a short sale. Your mortgage will be a thing of the past when it’s all over.

5. The lender will not seek a deficiency judgment because they are just happy to get “some” of the money back they lent to you.

6. The Lender has to accept a short sale offer.

7. You will recieve CASH after the closing.

8. Your home does not have to be owner occupied to qualify for a HAFA short sale.

9. You’re not responsible for the Brokers sales commission, the bank pays it! (I’d love to see that put in writing)

10. Sure, its ok to strip the house before you go.

I thought Real Estate Agents were not supposed to give legal advice? It’s getting very scary out there for us all due to the fact that agents are giving advice out of their expertise!  There are approximately 7 steps to consider before pursuing a short sale. A short sale is the very last step after all else fails. But if you are a Realtor who makes their living selling homes, it’s sold and packaged as the “First Step.”

One thing is for sure, Real Estate professionals are leaving the door wide open for more lawsuits by giving advice to consumers that would be better dealt with by a legal professional!

I had a client in Florida sue the real estate broker who was helping him with his modification because she told him not to make his mortgage payment and the house went into foreclosure.   It was later revealed she collected an upfront fee of $3500 from him and was not a licensed mortgage broker which required under Florida law.  His attorney and I were able to save the house and the attorney was later able to negotiate a permanent loan modification for homeowner.

The sad truth is that since the financial crisis began in 2007, everyone who lifted a pen to sign a mortgage or a sales contract thinks they’re an expert.  Most of these people lack any type of real experience.  Real Estate Brokers are no different than the attorneys, mortgage brokers or title people who jumped on the wave of modifications and short sales without knowing the fundamentals of how lending or how mortgage backed securities actually work in the U.S.