Compliance Corner
Thursday 31 July 2008
Short Sale Violations Top the List
Our ongoing efforts to reduce the number of fines issued for listing violations has produced great results. In June, only 37 fines accounted for the top three types of listing violations.
Please verify that any short sale listings you may have are in compliance with the mandatory rules below. In order to give subscribers enough time to update their Short Sale listings in MLXchange, we will not begin issuing fines for Short Sale Violations until September 1.
As the real estate market changes, so does the nature of the violations we find on MLXchange. In the current environment, fines for incorrectly listing Short Sales have spiked. To avoid making listing errors pertaining to Short Sales, you need to be aware of MFRMLS’s new Rules and Regulations that apply to the subject.
Short Sales are a complicated issue. The Rules and Regulations regarding Short Sales are lengthy to explain with all the possible scenarios. Before you enter into a contract on a Short Sale Circumstance, make sure you read the MFRMLS Rules and Regulations regarding Short Sales. In the meantime, here is a brief overview of our Short Sale policy:
MFRMLS rules make it mandatory to disclose any potential Short Sale
If you become aware of a Potential Short Sale Circumstance, you must disclose the Short Sale by selecting the “3rd Party Approval Req” drop down item from the “REALTOR® Info” field in “Listing Maintenance” in MLXchange.
You must also include one of the two following disclosure options in the “REALTOR® Only Remarks” and the “Public Remarks sections of the listing:
“Listing price may not be sufficient to pay the total of all liens and costs of sale, and sale of Property at full listing price may require approval of seller’s lender(s).”
OR
“Listing price may not be sufficient to pay the total of all liens and costs of sale, and sale of Property at full listing price may require approval of seller’s lender(s), and such approval may be conditioned upon the gross commission being reduced.”
If you select the first option, the sale is contingent upon the lender approving the contract, including the compensation noted.
If you choose the second option, you must specify in the contract how the reduction in commission will be applied between the cooperating brokers. IF THIS IS NOT SPECIFIED, THE LISTING BROKER WILL BE OBLIGATED TO PAY THE COOPERATING BROKER THE COMPENSATOIN STATED IN THE LISTING.
Here are some resources we have compiled to help you understand the new policies:
The Modified MFRMLS Short Sale Rule»
MFRMLS’s comprehensive guidelines for handling a Short Sale»