Get the Deed - Not in New York - Posted by David Parker, Esq.

Real Estate Investing Real Estate Law
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Posted by David G(OR) on July 14, 2008 at 19:36:32:

Of course when you’re up against some sleazy ignorant
puke of a lawyer, it almost doesn’t matter how legitimate the
transaction is.

I know of many long time experienced investors that are shying away
from using the term “stop foreclosure” even if their
business model is to buy outright (never letting them keep or stay in the house).

When I tell the homeowner that the house will not
go into foreclosure when I buy it, and that will be
good for them because a foreclosure will stay on
their record for a long time, even that can be
considered “consulting”.

The way the laws are (poorly) written, even a non-investor
home buyer could get sued because they bought a
house in foreclosure and ‘stopped a foreclosure’.

Far-fetched?

My point is that the laws are very poorly written
leaving it WIDE open for the jerk laywers to file a quick
suit which will end up costing the defendant $1000s to settle or fight it out to win. Essentially, the
lawyers end of getting a piece of the profits. How convenient.

-David G (OR)
david gor

(3) â??Foreclosure consultant,â?? except as provided in section 3 of this 2008 Act, means a
person that directly or through association with another makes a solicitation, representation
or offer to a homeowner to perform, for or with the intent to receive compensation from or
on behalf of the homeowner, a service that the solicitation, representation or offer indicates
will accomplish one or more of the following:
(a) Prevent, postpone or stop a foreclosure sale.

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Get the Deed - Not in New York - Posted by David Parker, Esq.

Posted by David Parker, Esq. on June 30, 2008 at 18:21:54:

Since the moderators are not NY attorneys, I thought I would give any New Yorkers a heads up on the new foreclosure legislation and how it will affect some of the short sale strategies that are posted on this page. The law passed both houses of the legislature but the Governor has not signed it into effect. (Donâ??t worry he will). It is supposed to go into effect September 1. Keep in mind that I am working off the bill that passed the legislature, the final law has not been published.

The Real Property Law is amended to create a category called â??Distressed Property Consultantsâ??. I will explain it in detail below but it specifically prohibits obtaining a power of attorney for the purpose of negotiating with a bank or lender on behalf of a homeowner.

If you are not in New York, I still would be watching what is coming out of your state legislature. There have been a lot of people out there that have obtained the deeds or powers of attorney without adequately explaining to the homeowner, what can be fixed and what canâ??t be fixed, leading to charges of fraud or misrepresentation. (and then there have been a few true crooks out there). Many good politicians around the country are going to want to â??do somethingâ?? about the subprime crisis especially in an election year. Therefore your state may adopt a similar prohibition.

The New York law states that:

A Distressed Property Consultant is defined as providing consulting services to a homeowner in the following ways:
â?¢ â??Stop, enjoin, delay, void, set aside, annul, stay, or postpone a foreclosure filing, a foreclosure sale or the loss of a home for non-payment of taxes.
â?¢ Obtain a forbearance from any servicer, beneficiary, or mortgage or relief with respect to the potential loss of the home for nonpayment of taxes.
â?¢ Assist the homeowner to exercise a right of reinstatement or similar right provided in the mortgage documents or any law or to refinance distressed home loan.
â?¢ Obtain any extension of the period within which the homeowner may reinstate or otherwise restore his or her rights with respect to the property.
â?¢ Obtain waiver of an acceleration clause contained in any promissory note or contract secured by a mortgage or a property in foreclosure.
â?¢ Assist the homeowner to obtain a loan or advance of funds.â??

If you are doing any of the above, then as a Consultant you are prohibited from taking a power of attorney from the homeowner. (This is specifically mentioned). In addition the Consultant must; create a full written contract, that is provided to the homeowner prior its execution and the contract must be signed by the homeowner and notarized, the contract must allow a five day recession clause, fully disclose the nature of the services provided, and disclose the full contact information of the Consultant.

Exempt are attorneys (of course), lenders, lien and judgment holders, banks, a HUD approved mortgagee, title insurers, and a bona fide not for profit (this is not defined).

The penalty is that the Consultant is liable for actual and consequential damages. If there is a finding of recklessness, the court can award treble damages.

While people can still make money acting as a pure Consultant, trying to do a short sale in New York by getting the deed is going to be prohibited.

David Parker, Esq.

3

Disagree - Posted by William Bronchick

Posted by William Bronchick on July 01, 2008 at 13:56:27:

Actually I am a NY attorney and helped draft a very similar statute in Colorado, where I currently practice so I am very familiar with the statute. A person who purchases a property from a seller is not a “foreclosure consultant” unless he negotiate ON BEHALF of the seller. A short sale investor is negotiating on his OWN behalf and would be exempt. I had this specific discussion with my state Attorney general when the law was being drafted and it was meant only to apply to people who are consultants, that is, they act on behalf of a seller to negotiate a forbearance, etc.

4

DPC now the law in 18 or 19 states - Posted by John Merchant

Posted by John Merchant on July 01, 2008 at 06:41:53:

WA State recently got our dose of this bitter medicine and here, any person approaching the homeowner in distress, or offering to assist him in any way with his delinquency is a DPC.

As you say it is in NY, here his atty is not a DPC but his RE Agent is!

The really nutty and egregiously bad part of our stat. is that this person then, by law, becomes the FIDUCIARY of that HO, owing him a high duty of loyalty, disclosure, etc!

The origin of these DPC laws is national attorney general association who, in conjunction with Realtors is pushing to get them passed country wide so as to help the poor HO who’s been lied to and swindled so often by the “foreclosure rescue” people.

Clearly here, and maybe in your states too, the legislature went too far and passed legislation that’s now got to be corrected and modified back to some semblance of reality.

5

But… - Posted by BigV

Posted by BigV on July 01, 2008 at 03:44:25:

Isn’t the “Consultant” the person that merely assists the homeowner but does NOT purchase their property?

Most short sale investors purchase the property, so they would not qualify as ‘consultants’, no?

In IL, there is a legislation governing distressed property purchases (DPP) and distressed property consultants (DPC).

DPP is defined as those that purchase the property AND let the homeowner retain interest in the property (so, the rules do not apply if you purchase outright)

DPC is defined as someone FOR A FEE is trying to assist the homeowner in foreclosure, similarly to what you have quoted from the NY legislature.

However, if you are purchasing a house outright, as far as I know (and I’m not a lawyer, not giving legal advice) the foreclosure rescue legislation does not apply to you.

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Re: Disagree - Posted by BigV

Posted by BigV on July 02, 2008 at 07:37:39:

William, does the statue apply to PAID consultants only, or even those that negotiate a forbearance agreement without getting paid (as a help to homeowners).

Alexis McGee has a course that is about helping people and I’m wondering if her students would be affected even if they help the owners without gaining any money for their efforts?

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Re: But… - Posted by David Parker, Esq.

Posted by David Parker, Esq. on July 01, 2008 at 05:49:03:

I didn’t mean to imply you can’t do a short sale in New York. However, I have seen strategies discussed on the site that suggest that people get a power of attorney from the seller in order to negotiate a short sale. This sounds especially attractive to newbies rather than trying to buy to property.
In addition the New York legislation makes no mention of a fee when describing consulting services so it can be interpreted more broadly.
I suspect that much will come down to what the seller believes you promised him. That’s not a good place to be.

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Re: Disagree - Posted by William Bronchick

Posted by William Bronchick on July 02, 2008 at 11:47:45:

You can be a consultant even for free. The key point is that you are working on behalf of the seller or you are working on your own behalf as a purchaser. When you blur that line you get into trouble, as many investors do. They try to be a “homesaver” of all sorts, offering loss mitigation, short sale, new loan and/or buy the house. Once you are a “consultant”, you can’t buy the house.

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Re: Disagree - Posted by Jim_Alaska

Posted by Jim_Alaska on November 02, 2008 at 08:17:04:

I think Bill is right, as usual. In both Calif. and Oregon these new laws are scaring the heck out of me.

Just as I am tying to break into the foreclosure investing market it is looking like any “get the deed” type strategy won’t work. Here is a copy and paste of one of the things you can’t do in Calif.

"Calif Civil Code: 2945.4. It shall be a violation for a foreclosure consultant to:
(e) Acquire any interest in a residence in foreclosure from an owner with whom the foreclosure consultant has contracted.

You are also forbidden from contacting creditors in behalf of the owner.

It is looking to me like a SS is the only way to get into foreclosure investing. I hope I am wrong.