By Robert Freedman, senior editor, REALTOR® Magazine
The affidavit that Freddie Mac requires servicers to obtain in short sales has been changed at NAR’s request to reduce what was seen as an unreasonable amount of liability risk to practitioners. Freddie Mac requires the affidavit to reduce illegal flipping and collusion between buyers and sellers but NAR members said the language held them liable for situations over which they had no control. (See a past blog post.)
Months ago NAR brought these concerns to the company’s attention, and the result is the revisions to its required language.
The biggest change has to do with what’s known as joint and several liability. In essence, this extends to agents liability for false statements made by others involved in the transaction, even if agents know nothing about the statements. To be sure, agents can fight to get the liability removed, but you can imagine the work and headache that’s required to win that argument.
The company made other changes to its language, and the bottom line is, the liability risk now is much more appropriately aligned to practitioners’ role in the transaction.
NAR has since created a resource page with more information on the change. There’s a link to Freddie Mac’s policy and to a bulletin the company put out on the change. There’s also a copy of NAR’s letter expressing its concerns.
In the video above, NAR Managing Director of Regulatory Policy Jeff Lischer talks about the new language and what to do if you’re in a transaction and the servicer is using the old language.