Short Sale and Foreclosure Assistance
A partnership of local Realtor Associations across Massachusetts joined together in late 2009 to apply to the National Association for assistance in training members on Foreclosure Prevention and Short Sale Processing. A 7-series set of videos was created specifically for you. Visit our Online Education Center to view the videos at no cost.
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The Board also held a Short Sale / Foreclosure Breakfast Forum and distributed quite of bit a helpful information for REALTORS dealing with short sales and foreclosures. We have included all of the materials provided here as well.
New MLS Rules Clarifying Disclosure Requirements:
Also worth noting are the changes made to our MLS Rules and Regulation regarding the disclosure of short sales. See below for the additions made to help clarify the process of disclosing the short sale possibility in the MLS listing information.
Section 5. Nothing in these MLS rules precludes a listing participant and a cooperating participant, as a matter of mutual agreement, from modifying the cooperative compensation to be paid in the event of a successful transaction.
NEW: Section 5.0.1: Participants may, but are not required to, disclose potential short sales to other participants and subscribers. When disclosed, participants may, at their discretion, advise other participants whether and how any reduction in the gross commission established in the listing contract, required by the lender as a condition of approving the sale, will be apportioned between listing and cooperating participants.
NEW 6. Multiple Listing Services must give participants the ability to disclose to other participants any potential for a short sale. As used in these rules, short sales are defined as a transaction where title transfers; where the sale price is insufficient to pay the total of all liens and costs of sale; and where the seller does not bring sufficient liquid assets to the closing to cure all deficiencies. Multiple Listing Services may, as a matter of local discretion, require participants to disclose potential short sales when participants know a transaction is a potential short sale. In any instance where a participant discloses a potential short sale, they must also be permitted to communicate to other participants how any reduction in the gross commission established in the listing contract required by the lender as a condition of approving the sale will be apportioned between listing and cooperating participants. All confidential disclosures and confidential information related to short sales must be communicated through dedicated fields or confidential “remarks” available only to participants and subscribers
New Fields in MLS
- The MLS has added a yes/no check box field to indicate a property is in foreclosure. This field is not mandatory but will seek to help cooperating agents in locating these properties for interested buyers.
- The MLS also mandates that Short Sales must be disclosed (as indicated above) in the Realtor-to-Realtor remarks, so that cooperating agents and their buyer clients know that third party approval is required before execution of agreements.
Notes from the Attorneys of the Massachusetts Association of REALTORS Legal Hotline
Q. Can you describe the responsibilities of a lender or bank that has recently acquired title to a home at a foreclosure auction in which tenants are currently residing?
A. In some instances, lenders may seek to have tenants vacate the building after they have taken title to the property following a foreclosure sale. Governor Patrick and the Legislature have ensured that a tenant’s lease will no longer be immediately terminated by a foreclosure sale. According to a new state law (Chapter 206 of the Acts of 2007), tenants who live in a property that is foreclosed on are entitled to at least 30 days written notice if a lender wants them to vacate their apartment. Also, if a tenant receives state or federal rental subsidy, the terms of their rental agreement will not be affected by a foreclosure sale. Tenants who do not want to leave their apartments, after a lender gives proper notice, do not have to leave immediately. They have a right to a hearing in court. At the hearing, the court will determine how much time they will be allowed to vacate their apartment. Lenders may not force tenants to vacate an apartment against their wishes without court approval. Additional information regarding tenant rights can be found in a new brochure published by the Commonwealth of Massachusetts. You can access this brochure by clicking on “Legal Resources” at www.marealtor.com.
Q: I am the listing broker on a short sale property which is subject to lender approval. A buyer submitted an offer which my seller signed and sent along to the lender for approval. It was been two weeks and the lender has not made a decision on the offer. If I receive any additional offers how should they be handled? I thought the law required all offers to be presented?
A. You are correct that license law requires that all offers be presented forthwith. It is also important to remember that the listing broker has an obligation under Article one of the REALTOR® Code of Ethics to present all offers. State regulation and the Code of Ethics, however, have an exception if the seller instructs you not present the offer. This issue can typically be addressed through the terms of a listing agreement. In fact, many exclusive right to sell agreements state that the broker has no obligation to present offers after one has been accepted.
If the seller has accepted an offer, caution should be exercised when the seller is contemplating any other offers that are submitted. In signing the first offer, the seller has created legal obligations that can bind them to move forward in the transaction with that buyer. If a better offer is received before the lender responds, a seller can submit the offer to the lender, however, the seller should not sign another offer without legal advice from their attorney. Furthermore, Article one of the REALTOR® Code of Ethics states that REALTORS® shall “recommend that sellers/landlords obtain the advice of legal counsel prior to acceptance of a subsequent offer except where the acceptance is contingent on the termination of the pre-existing purchase contact or lease.”
REALTORS® should seek legal advice for assistance. For additional questions, authorized members may contact the MAR Legal Hotline, weekdays, from 9 a.m. to 1 p.m., at 800-370-5342.