I have a a contract for short sale on my second home through a realtor. I am trying to decide if finding a RESPA violation would help me in anyway with the short sale, before hiring someone to check for violations. The FMV is dropping by the minute and I am concerned the SS process will take so long our buyer will walk.
The current loan is a 1st and 2nd refi with WAMU done in July 2006, so I am within 3 years. A single notary came out to my office for closing. Nobody was in the building except my husband, myself and the loan closer. She was from a "closing company". My documents do not have anyone's signature on any them. I realize this is not unusual, but I never got any piece of paper signed by anyone. Nothing came in the mail, later.
I looked through my documents from closing and there is no "right to cancel" in there. We may have signed one, but we did not get a copy, nor did they ever mail us anything after closing. If I did request the original documents and the "right to cancel" is in their copy, how can it be proven that it was not in my copy. The bank could say I took it out. There is a check list in the loan documents that shows a check by "notice of right to cancel" on the lender's closing instructions sheet, but there is not one in my copy.
According to the packet, the loan application has an Interviewer Date of 4-16-2006, our signature date was 5-10-2006, and we closed on 7-26-2006. Credit score was obtained on 7-6-2006. (I mentioned these dates because of something that was said to me regarding RESPA, by the man I ask about below)
I have made contact with a man that was referred to me. The person that referred him has hired him, but has not completed the process, so I can't judge how successful he is regarding his claims. I want to make sure he is not over estimating the benefits to me of a RESPA violation.
He wants $1200 up front for document fees to check for violations and negotitate the short sales. Then he gets 3% of the amount written off in a short sale. The write down amount will be $156K plus 5% realtor fees and all other fees, if approved. That will be a pretty substantial amount paid to this man. I asked how it would be determined if we pay him or the bank his reply was:
You mentioned that most of the time, with a short sale, your commission is paid in closing by the bank. What determines whether it is paid by them or by us? 90% of the time the bank pays my fee, and it is only not paid when the bank becomes so frustrated with me that they require the title company to remove it from the closing statement. ffice
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The man says: 70% of loans done during the last part of 2004, 2005 and 2006 have RESPA violations.
He says:
A RESPA violation put the leverage on the borrowers side due to the fact that a court can order the original mortgage and note voided. Which means the lender has no right to the property or borrowers. Knowing this if RESPA violations are discovered the bank has no leverage. A RESPA violation will have no effect on your credit rating. In regards to another property we have that is not in short sale, this is how he responded to my question regarding the benefits of finding a RESPA violation on that property. A RESPA violation would give us the leverage to have the lender write down the loan to a point that was 75-80% of fair market value,>> and the rate to a acceptable level. In addition to "right to cancel" he mentioned things like date of first credit report vs. date of application. He seems to rely on comparing the mortgage company's file with the paperwork we got. Does a RESPA violation ever lead to the lender reducing the principal to current FMV or below, as claimed above? If it could, we would keep the property. I have not been able to find anyone else making this claim. I am NOT trying to get out of paying someone to review the documents, but I don't want to hire someone that is only trying to take advantage of me with empty promises if there is no need with the Short Sale. Please, help me decide: 1. If there is a benfit to a RESPA violation for a short sale. 2. If I should get someone to just review the documents and let the realtor use those violations to assist the SS, instead of hiring someone to do the negotiations. 3. If any of the things I mentioned above are glaring violations that fall under the 3-year timeframe. 4. Other types of obvious violations I could look for. Thanks! JessPhil (Sorry, I could not get the color to go back to black. It stuck on red. > > 
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