From Pre-Foreclosure to Pre-Trial Hearings


I am quite sure that many of you are staying abreast of the new laws regarding dealing with sellers and properties on their way into foreclosure status. On my side of the country it is especially critical to follow all guidelines of the pre-foreclosure business. Those who are choosing to take their chance are finding themselves in JAIL. These not so new but recently enforced laws have real estate investors chasing the same agents they kicked to the curb years ago.

In Maryland, we can not make contact with any home seller who is 60 days or later past due on mortgage payments. Only a real estate agent has the authority to make such contact. Now all of the sudden real estate investors in deep negotiations with sellers who are in similar situations must immediately cease fire.

I would jump out and say that 65% or more active investors have some dealings with pre-foreclosure homeowners. On top of that, 100% of real estate investing courses promise to keep students up to speed on the latest laws and regulations surrounding the field but the information is not being taught. Government officials and local newspapers are cracking down hard on these programs and these programs are becoming the blame for transactions gone wrong. There is one case in MD where a homeowner is attempting to sue a real estate investor, the buyer, and the program through which those persons acquired their real estate investing expertise. And it seems as though they have a very strong case when looking at all of the facts.

I have just a few tips to help save you investors some trouble before it comes.

  1. When initiating your conversations with sellers, immediately ask whether payments are current. If the payments are not current, kindly request that they sign an authorization to release loan information to your company and its agents to obtain an accurate picture of their mortgage. There are many times when a seller does not disclose that they are behind in payments, being notified by attorneys, are already in foreclosure. Getting the scoop directly from the lender will keep your tail out of jail.
  2. Put a QUALIFIED real estate agent on your team. Agents are the only persons who can hold a conversation with a seller regardless of the position they are in. Agents are the most important piece to your pre-foreclosure business. It is called “list it and I will be your first contract on it.”
  3. Either get with the new rules or get a GREAT LAWYER! If you continue to operate your pre-foreclosure business in a fashion that ignores the rules, you may find yourself behind bars. “The Foreclosure Consultant” stipulations in the Maryland State Law are very stiff and penalty heavy. Check your local laws to see what applies and what doesn’t.
  4. When your real estate direct mail campaigns go out, have your agent return the calls to screen who you can and cannot talk to.
  5. If you take a course on real estate investing and someone promises to tell you how to negotiate short sales, ask if they are having a lawyer on site to explain the whats, whens, and hows of the law.

Blessings to your Real Estate Investing Business,

Milton B. Yates

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  1. Can I get a link to a .gov or other reputable site that states the actual law that only agents can talk to a homeowner over 60 days behind in payments? I’ve heard about that maryland case, and have yet to find any proof that a 60 day law exists.

  2. Here in Kansas we were served notice on an old, previously unenforced statute that may or may not lead to trouble regarding short sales/pre-foreclosures. Of course, there is not case law in Kansas regarding the law so now everyone is scrambling around making sure they have the right disclosures/addendums.

    Will be interesting to see where this leads.

  3. Thanks for the info on this hot topic. Also, thanks for advocating the need to for an agent in some matters. With the way the market has gone the last several years, some think that agents have no place are not necessary any more. Very eloquent post. Cheers.

  4. In my mind, it is better to invest in something that is going up, rather than down. That is why I think the province of Saskatchewan is the perfect place to buy real estate right now.

  5. The smart investors have been using real estate agents anyways because they understand the value of an extra set of eyes as well as having a professional opinion to look back to. Its the “I think I can do it better myself that had to “come back” to realtors”.

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