I got an email a few days ago from the Colorado Department of Real Estate, the mortgage broker regulator, outling their new interpretation of “Loan Modification” as “mortgage brokerage”. I guess they are getting a lot of complaints from foreclosure victims who lost money to grifters posing as “Foreclosure Rescue Specialists” that promise a loan modification with the victims lender stopping their foreclosure dead in it’s tracks.
Two things….if you fall for that line of BS, you deserve to get taken. Second, if you are a legitimate real estate investor, don’t get caught dead even intimating you can do some of the same things.
In short, don’t do anything that could later be construed as “foreclosure rescue” or “mortgage modification”. In Colorado, the new interpretation of the law would put you in hot water with regulators who could fine you or worse for acting as a mortgage broker without a license.
Massachusetts has banned “for profit” foreclosure rescue altogether. Illinois, Washington and Ohio are targeting foreclosure rescue activities with pending lawsuits. And as I mentioned, attempting to “talk to their lender” could mean a violation of Colorado mortgage broker laws.
I had a rather unique foreclosure technique that does involve the homeowners but does involve talking to their foreclosing lender or lenders. I put it on the shelf a few months back even though I have a mortgage broker license in Colorado.
I knew lawmakers would pass a bunch of laws ostensibly to protect consumers which in reality would do little since only legitimate business folks will be only ones run off by such heavy handedness. I, being more prudent than greedy, didn’t want to be anywhere near a foreclosure deal when that happened. The politicians have successfully made foreclosures and foreclosure hunting too dangerous “legally” at exactly the moment they need legitimate investors to sop-up their excess inventory.
That’s OK I’ve got bigger fish to fry…as I mentioned last week…the perfect investment for a side-lined real estate investor is in gold! I call it Landlording Gold…and just this week the spot price of gold went from about $730 an ounce on Wednesday to a closing price of $801 Friday. I’ll let you do the math.
Quick…what’s the cap rate on that investment?
It’s a lot more than 12% per year, I can tell you that….check out my BiggerPockets Blog to learn more about Landlording Gold.
And remember, don’t say or do anything that implies you are “rescuing” a foreclosure prospect or negotiating a mortgage modification. It’s a no-win proposition.
See you next week!
Article Author:
Rob K. BlakeRob K. has written 49 articles for us.
Visit Rob K.'s Website: http://themortgageinsider.net
Rob K. Blake, a 15 year veteran of the mortgage industry, is a renowned public speaker, author, and former radio talk show host. His blog, TheMortgageInsider.net, is dedicated to educating mortgage consumers, mortgage providers, and investors about both mortgage and housing markets.
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I don’t know if I’d be pumping gold right now, it is just as volatile as the stock market, which means the average real estate mogul probably shouldn’t couple the volitility of the real estate and commodity markets.
The sweet spot for getting modifications done has always been when the client is between 60-90 days delinquent. Granted it is possible to save a homeowner who is already had a NOD filed against the property or even a pending sale through filing Chapter 7 or 13 Bankruptcy to delay the foreclosure, hopefully get a negotiator assigned and finish the modification, but this is very, very risky and there is no guarantee that after the lender has started foreclosure proceedings that they will let the borrower reinstate the loan without making a full payment of the past due balance, or actually going through with the BK. I agree with you 100%
That’s one heck of a rate of return, BTW.
Justin’s last blog post: Loan Modification Requirements & Guidelines