Attorney General of Washington, Rob McKenna
June 2, 2008
SEATTLE – A new state law to help protect financially strapped homeowners from equity skimming and foreclosure rescue scams becomes effective in Washington on June 12, 2008. The new law provides safeguards for people trying to stop the loss of their home and requires new disclosures and responsibilities for individuals claiming to help homeowners avoid foreclosure.
The Legislature passed House Bill 2791 last session. The law, based on legislation proposed by the Attorney General’s Office, aims to reduce foreclosure rescue schemes that can occur when the original homeowner is given the option to lease or buy back the home from a new buyer.
In this time of increased foreclosure rates, desperate homeowners have been lured by offers of assistance – only to be cheated out of equity they’ve built up and tricked into transferring ownership of their home. Many homeowners are unaware that they’ve lost their property until they receive an eviction notice.
The new law requires a written contract with clearly disclosed terms and stops investors from taking homes for nominal amounts of money or no money at all. It also regulates the activities of “distressed home consultants”, people who claim they will help you stop your foreclosure for a fee.
Affected Homeowners and Real Estate Professionals: The law protects distressed homeowners, defined as those whose principal residence is in danger of foreclosure because the homeowner has defaulted on a mortgage, are at least 30 days delinquent on the mortgage, haven’t paid real property taxes or have told real estate professionals that they are in danger of default.
An individual who claims to help homeowners avoid foreclosure for a fee may be deemed a “distressed home consultant”, who will be required to represent the best interests of the homeowner and to include special provisions in a rescindable contract.
New Contract Requirements: Changes are being made to the standard form used to list properties on the MLS. In some cases, sellers will be asked to sign a new listing agreement before their real estate agent can continue to market the property.
Homeowners should review their contracts to determine whether their agent is offering distressed homeowner consulting services.
Tips for Distressed Homeowners:
- Consider alternatives to foreclosure. Your lender may be able to temporarily reduce your mortgage payments or assist you with refinancing your loan so that you can stay in your home. If you are unable to afford the house long-term, you may sell before the foreclosure sale and save some of your equity.
- Approach any offer of assistance with caution. Carefully select the professionals you choose to help you. A qualified real estate agent, attorney, credit counselor or other financial professional can help you properly complete a sale transaction.
- Ignore signs, fliers and hand-written notes offering foreclosure help. Scam artists typically advertise their “services” on posters pinned to telephone poles and fliers dropped on your porch. They also contact people whose homes are listed in public foreclosure notices.
- Read everything and don’t sign any papers you don’t understand. Once you sign papers, demand immediate copies that you can keep.
- The state Department of Financial Institutions and the state Housing Finance Commission operates a toll-free number to provide assistance to Washington residents facing foreclosure or who are considering refinancing. Call 1-877-894-HOME (1-877-894-4663) or visit their website at www.homeownership.wa.gov
Brought to you by your Real Estate Profestionals at Distinctive Properties, Inc. serving the greater Tri-Cities Area.