July 6th, 2012 at 7:05 pm
Last week I received a News Release from the Department of Real Estate entitled “Real Estate Agent Pleads Guilty to Conspiracy to Commit Real Estate Fraud in Connection with Short Sale Transaction.” In the Release, the DRE tells of a licensee who handled two short sales where the bank stated that the commission could not exceed 7%. Despite that limitation, the licensee required the buyers to pay a “short sale negotiation fee” that was not disclosed to the lender. That fee, when combined with the commission actually paid, exceeded 7%. As a result, in his guilty plea, the licensee admitted that he “fraudulently collected two short sale fees to which he was not lawfully entitled…” As part of his sentence, the agent surrendered his real estate license, served 90 days in jail, paid restitution of approximately $25,000 and was placed on 3 years probation.
Of course, as you all know, we have been saying for years that nothing can happen in a short sale that is not disclosed to and approved by the lender and doesn’t appear on the HUD. We have also consistently told you that since short sale negotiation is licensed activity, any “short sale fee” is really a commission and must be handled as such, with a commission agreement, an agency disclosure, etc. In other words, we have told you that the conduct which resulted in this criminal prosecution should never occur. And, of course, we tell you those things to keep you away from the DRE and District Attorney and make sure you can keep your license and keep selling real estate. Please remember that and that, at all times, we have your best interests at heart.
As always, please contact us with any questions you may have
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