Realtors are Creating Ombuds Programs to Offer Stakeholders an Alternative Dispute Resolution Option

Local Realtor boards across the US are turning to Ombuds programs in growing numbers to address concerns from consumers and Realtors. The first program was started by the California Association of Realtors and was well received. Subsequently, the National Association of Realtors adopted a policy that serves as the model for local Realtor organizations. (Although the NAR policy has been widely copied, it is not available online.)

The standards for Realtor Ombuds are distinct from those developed by the two leading professional Ombuds associations, the International Ombudsman Association (which serves Organizational Ombuds) and the United States Ombudsman Association (which serves Public Sector Ombuds). Nonetheless, Realtor Ombuds are similar in that they are impartial and informal, and work to resolve misunderstandings and disagreements through facilitation and mediation rather than adjudication. Qualifications for Realtor Ombuds generally include mediation and/or negotiation training, Ombudsman training class from the state association of Realtors; and training in professional standards in real estate.

A few state Realtor Ombuds programs: Alabama; Arizona; Idaho; New Hampshire; and Oregon. Stories about local Realtor Ombuds programs at the Ombuds Blog.

1 member likes this

Comment by John C. Turley on January 27, 2011 at 10:56pm: In Michigan, the NAR chapter that covers the largest counties in SE Michigan (Wayne and Oakland) requires the members of their grievance committee to hold an active realtor's license. Most of the cases in Michigan involve charges brought by a home buyer or seller against the real estate agent for violations of the Realtor's Code of Ethics. Typically, a buyer or seller did not realize a satisfactory buy/sell transaction because of the realtor's failure to perform or to render the value added services promised at the point of listing. In many cases, the realtor clearly violated the Code of Ethics, as well as every righteous principle known to humankind.

Within the mortgage industry the strongest need is for ADR services between the financial institution and the mortgage holder in default. The banks are inflexible when it comes to collecting their past due monies once the foreclosure process gets underway. Instead of foreclosing on the property, the banks should work with an ADR specialist and the party in default to negotiate a mutually agreeable settlement or restructure the payment schedule. This way, the bank maintains a cash flow and a customer and does not assume ownership of properties that are difficult to unload in this economy. The banks are not structured to negotiate with the parties in default. The home owners and the financial institutions need an ADR specialist rather than exclusively relying on the services of a staff or hired lawyer. The needs of both parties should be addressed within the framework of the ADR processes in a defined window of 30 days within the foreclosure proceedings. This 30 day period allows the homeowner to come up with financial solutions to their problem The banks tend to wait for the 30 days to expire and then demand payment in full from the mortgager.

Instead, both parties should work together with the help of an ADR specialist to use the time wisely to allow the two parties to develop a solution based on their mutual needs. The remedy is for Bank of America, Wells Fargo and Deutsche Bank to listen to the voice of reason from the ADR community and give us a role in the process within the 30 day foreclosure cycle to bring the banks and the customers together to determine a solution in lieu of foreclosure. The benefits to the bank are stated above. The bank can actually write a new loan in parallel with the "short sale" process and realize further profits rather than lose the entire balance due, the cash flow, profits and interest and the customer with the prospect of acquiring property that the bank really does not need or want. The bank CEOs need to see the light. I will follow through with them and report the outcome.

JCT