In recent years, short sales have made up a diportionately large number of all real estate transactions and probably will contimue to do so for some time.  However, there are important limits on how far a real estate agent can go in representing their seller when it comes to short-sales.  The most far-reaching limitation is imposed by the Georgia Residential Mortgage Act (the "Act") which was modified recently to comply with the Secure and Fair Enforcement for Mortgage Licensing Act (the "S.A.F.E. Act) which is a key component of the Housing and Economic Recovery Act of 2008 ("HERA").

Pursuant to the Act, "it shall be prohibited for any person to engage in the activities of a mortgage loan originator without first obtaining and maintaining a mortgage loan origination license".    A mortgage loan originator is defined as someone who takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan.  The term "mortgage loan" includes the renewal or refinancing of a loan". 

The Act specifically exempts real estate brokers and agents from licensure, but only to the extent that they are performing real estate brokerage activities.  Notably, real estate brokers and agents are not exempt to the extent that they "directly or indirectly negotiate, place or find a mortgage for others".  In any of those events, they must be licensed as mortgage loan originators or mortgage brokers. 

            Normally, real estate brokers and agents do not get involved in negotiating the terms of loans for their clients and should not run afoul of the Act.  However, what about in short-sale situations?  If an agent contacts the seller's lender trying to negotiate terms for a short-sale, does this violate the Act?  We do not have any definitive case law on this yet, but the answer certainly appears to be "yes". 

So, what's an honest agent to do?  In short, the agent should limit their role to that of information provider and have no hand in actual negotiations with the seller's lender.

It is okay for a real estate agent to gather information about the property, undertake a market analysis, create a BPO, suggest a list price for the property, assist in the negotiation of the terms of the sale to a buyer, and to generally do all the things agents normally do for non-short-sale sellers.

It is probably fine for an agent to provide all of the above information to the seller's lender and to provide the lender with any other information or documentation it may request.