BEWARE! BEWARE! BEWARE!
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.
- 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.
- 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.”
- 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.
- When your real estate direct mail campaigns go out, have your agent return the calls to screen who you can and cannot talk to.
- 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