Program Changes & Policy Statement

IMPORTANT CHANGES TO THE

SHORT SALE PROGRAM & NRELG NEGOTIATING FEES

Effective January 10, 2011

(If your initial consult with your client was prior to January 10, 2011 we will allow for use of the initial engagement letter, assuming you have a copy.  As of February 10, 2011 ALL new cases will require use of the new engagement letter no matter the date of the initial consultation.)

Why are changes necessary?

We’ve identified the following challenges with the original short sale program and NRELG pricing structure:

  • It’s too complicated.  While the intention was good, too many agents believe the program is confusing to use and has too many requirements for participation.
    • Many agents do not “Follow the Yellow Brick Road” because they believe the program is confusing and has too many requirements.  Following half the guidelines is worse than following none of the guidelines.
  • Agents and sellers are frustrated with the pace of negotiations and the lack of regular communication from NRELG asset managers and negotiators.
  • Some agents prefer to work with their own negotiators or handle the negotiations themselves.
  • Lien holders often refuse to pay certain closing costs or negotiation fees resulting in the law firm being unpaid for many transactions which were successfully negotiated.  Naturally, this directly affects NRELG’s ability to provide quality professional services.  NRELG cannot continue to work for free.
  • Agents and brokers are not properly preparing the seller’s and buyer’s expectations about the short sale process. The result is that clients are often disappointed, confused and angered by the process.
  • The $1,000 performance deposit is difficult to get from sellers and often creates more confusion than benefit.
  • NRELG attorneys, staff and asset managers are spending too much time on administrative tasks (reviewing seller financials, reviewing title reports, sorting and uploading contracts and documents, managing escrow accounts) and not enough time talking to clients or negotiating with lien holders.
  • Many seller chosen title companies are either uncooperative, slow to respond to requests for HUD-1’s, providing incorrect HUD’s or charging excessive fees which impact the ability of NRELG to negotiate effectively and interferes with their ability to collect negotiation fees.

Improvements to the Short Sale Program

In order to make our short sale program more user friendly while providing greater customer satisfaction the following program changes are effective as of January 10, 2011:

  • There are no more sales contract addenda
    • We now offer a simplified Listing Agreement Addendum for price reductions only.
    • Here is a copy of the revised Addendum to Listing Agreement for your convenience and review.
  • Buyers are no longer required to complete their home inspection or appraisal BEFORE lien holder approval.  It is now the buyer’s choice to have the contingency period run either from the date of contract ratification or the date of lien holder approval.
    • If value becomes an issue during negotiations, the buyer has the option of providing an appraisal to prove that the purchase price is a market value offer.
  • We no longer require a $1,000 performance deposit paid by sellers.
  • Sellers are no longer required to provide a title report to NRELG.  This will save the seller another expense and avoid unnecessary delays in getting the property listed.  The closing company will be required to manage title problems that may arise.
  • Sellers will no longer pay for the buyer’s title insurance.
  • Agents will no longer have to wait for NRELG review and approval prior to listing the property in the MLS.
  • All documents required from the seller (financial information) and required from the listing agent (listing agreements, purchase contracts, MLS data) must be uploaded directly to the NRELG website (http://nrelg.com/submit-short-sale-forms/).  This change alone will save countless hours of administrative time in sorting and collating documents.
  • Sellers will be required to complete a free mandatory telephone consultation to establish their eligibility for a successful short sale, have their questions answered and properly set their expectations about the short sale process.
    • It is recommended (but not required) that this consultation be completed prior to listing the property in the MLS.
    • The consultation must be completed before NRELG can accept the seller as a client.
    • The initial consultation is free.
    • CHRE agents will not have to discuss fee arrangements with the seller.  All fees will be discussed and agreed to during the phone consultation.
  • NRELG will now charge a flat fee of 1% of the sales price to the seller for short sale representation.  The fee cannot exceed $10,000 and will not be lower than $1,000.In the event the lien holder will not pay any fee to the Law Firm on the HUD-1, then sellers agree to pay $1,000 outside of closing at or before the settlement date.
    • Agents will not have to discuss fee arrangements with the seller.  All fees will be discussed and agreed to during the phone consultation.
    • Here is a copy of the NRELG Engagement Letter with Fee Agreement for your convenience and review.
    • NRELG fees will only be charged if a short sale successfully closes.  No fee will be paid for a short sale that does not close.
    • If a seller chooses not to accept responsibility for the law firm fee, NRELG cannot represent the seller unless we make alternative arrangements for payment.
  • NRELG reserves the right to select the closing company to represent the seller.  The purchaser will be free to choose their closing company but will not represent the seller.
    • Agents will no longer have to request draft HUD-1’s.
    • This will give NRELG much more management control of the covered fees and delivery time requirements for lien holders.
    • NRELG will notify the seller and listing agent when the seller’s closing company has been selected.
  • NRELG has switched to a new, user friendly management and communication software.
    • Agents and sellers can easily access their file for current status reports.
  • NRELG has implemented new case load management procedures to insure that negotiators/asset managers avoid overload.
    • Negotiators/asset managers will have more time to talk directly with clients and agents.

Some quick clarification on these changes.

  1. There are NO CHANGES to any deals already in the pipeline.  That means any deals where NRELG has agreed to represent the seller in a short sale.  NRELG will honor all signed engagement letters received prior to Monday, January 10, 2011.
  2. If you liked using the original short sale program, you may STILL USE it.   In fact, we recommend using the original program because it is very effective with gaining short sale approvals.  We will NOT REQUIRE you to use the original program (and the forms) as of Monday, January 10, 2011.
  3. If you continue to use the original short sale program, there will be two primary changes designed to help make the process more effective.
    1. The seller MUST have a consultation with Home Rescue Institute before NRELG will agree to represent them in a short sale.  Many of you have been doing this anyway.
    2. The seller must agree to pay any portion of the NRELG fee that is NOT paid by the lien holder on the HUD-1.   This will be explained to the sellers during the mandatory consultation.  We are NOT asking agents to pay any of the fees.
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