U.S. Senate Plans to Consider "Foreclosure Rescue Scam" Legislation. Its Time to Speak Up, Investors!

by | BiggerPockets.com

Time to Speak UP!

The following information is about what the U.S. Senate is up to. If any of this becomes law, it will have a direct and severe impact on my business.
There are very good and honest investors out there and BiggerPockets has been a great place for new & seasoned investors to get together and let others know how to do things the right and honest way.

U.S. Senate Plans to Consider
“Foreclosure Rescue Scam”

  • Legislation Expected to be Introduced Soon.
  • Measure Likely to be Modeled After Minnesota Law,
  • But May Contain Additional Restrictions Harmful to Investors Nationwide

February 22, 2008 (U. S. Senate)

Wisconsin Senator Herb Kohl has announced plans to introduce legislation aimed at curbing the rise of ‘foreclosure rescue scams’ – using a model which may include restrictions that could be harmful to all real estate investors. The measure is likely to contain some or all of the following provisions:

  • Ban on leasebacks-to-owners
  • Ban on upfront foreclosure consultant fees
  • Ban on all “subject to” transactions
  • Limitations on an investor’s ability to purchase or take an equity interest in a home in default
  • Ban on all advertising related to “Saving Homes from Foreclosure”
  • Restrictions on real estate seminars, which could even apply to Real Estate Investor Association meetings

Also noteworthy – in the Minneapolis / HennepinCounty area alone, foreclosures have increased more than five-fold since the 2004 passage of the Minnesota statute.)

On behalf of real estate investors at the national level, the National Association of Responsible Home Rebuilders & Investors (NARHRI) is already tracking this legislation. NARHRI Executive Director John Grant says that NARHRI will offer alternative legislation from the Commonwealth of Virginia, which has the support of the local realtors, lenders, consumer groups, and which recently passed the House unanimously.

NARHRI expects to see intense political pressure for passage of the legislation before members of Congress leave in the fall. NARHRI indicates it will be providing updates on this effort as circumstances warrant.

This is a very serious in my opinion. It is very frustrating to know that there are legitimate, honest and good investors, mentors and teachers that will be affected in a harsh way.

Please, spread the word on this to everyone you know in the business. It is our job to protect our business. If we sit back and say nothing, there will be no voices to be heard and this could actually become law.

Thank you!

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  1. Kidding on the square — where’s NAR in all this? Aren’t they my Knight in shining armor?

    You’re right about this proposed legislation. It’s typical of the politically pandering congress, which if passed will be immediately followed by nasty and unintended consequences.

    Thanks for being on this stuff.

  2. The problem is that people hear the word “scam” and they lose some common sense. The truth is, any scammer can take legitimate business practices and use them to defraud people. A legitimate investor can use the same techniques for legitimate deals.

  3. Most of the foreclosures are due to adjustable rate mortgages(ARMs). Many homeowners who got adjustable rate mortgages (ARMs) on their properties when rates were at an all-time low. Now those adjustable rates have increased and many homeowners find themselves making payments on homes that have no equity or even have negative equity. There is still hope for homeowners in foreclosure.

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