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Foreclosure Vultures ... BEWARE! (Colorado's NEW Foreclosure Protection Act)

You know them. They plant their little yellow signs. They check on the weekly election and demand lists religiously. They gather like vultures around any Seller that is or may be facing foreclosure. You, the Realtor, can only educate the selling public so much about these predators before an "investor" promising "Quick Cash and Walk Away From Your Problems" becomes the "too good to pass up" answer to the Seller's foreclosure problems.

Well, foreclosure vultures, watch your backs. The tables have turned. The Sellers that you have been making meals out of, can now make meals out of you. Ha. Ha. Colorado now has a new law, THE COLORADO FORECLOSURE PROTECTION ACT ... effective NOW (Jan. 2007) that protects the very people that you prey upon.

This comes in good timing, as "A rising wave of home mortgage foreclosures crested in 2006, propelling Colorado to the top of a much-publicized ranking (#1) that no state wants to be on." (according to Denver Business Journal article, Dec.29, 2006.) FYI: Nevada bumped it out of it's #1 position in November, 2006.

Colorado's foreclosure rate ranked first among the 50 states for eight consecutive months, from March through October, according to Irvine, Calif.-based RealtyTrac Inc.

And if you break this law ... don't plan on picking up soap anytime in the near future... and I hope you look good in orange. This is a "Go directly to jail. Go directly to jail. Do not pass GO. Do not collect $200." offense. Yep.

And what do I say? ... Thank Goodness! And what should YOU say? Well... You better just agree with me, ok?

Colorado now has a new FORECLOSURE PROPERTY ADDENDUM TO BUY AND SELL REAL ESTATE.

This Act was designed specifically for "investors" buying homes in some stage of foreclosure.

(Bolded items are pulled exactly from the Addendum.)
In BOLD, on the very TOP of this addendum, there is a "Note" that states:

This form is to be used only if (1) the Property is in foreclosure, (2) the Property is residential, (3) Buyer is not to reside in it for at least 1 year, and (4) ALL of the requirements in Section 3 (Terms) of this Addendum are satisfied. If these items are fulfilled, this Addendum may be prepared by a Broker for a buyer purchasing the Property as a rental or as a non-owner occupied. If ANY of the requirements are not satisfied, an attorney, NOT the Broker, should prepare the contract.

Now, this references a "Section 3 (Terms)" which I will now address. I find these Terms to be of particular interest. I will address some of the ramifications after each term. My input will be in non-bolded italic.

Terms: Buyer and Seller agree to all of the following 6 conditions: (Note that it says ALL ...)

a. There will not be any financial or legal obligations of Seller (related to Property) after closing, except income tax liability, if any. Basically, the Seller cannot be held liable, after close, for any written or unwritten obligations. This nips in the bud the "Yeah. We'll close but after close you pay me XX a month clause" that has been used against Sellers.

b. There are no rental agreements or leases for the Property between Buyer and Seller. This prohibits the Lease Option/Lease Purchase that has hurt Sellers facing foreclosure in the past. We have heard plenty of stories where a Seller agrees to a Lease Option, where the "investor" buys their property (for a horrifically low price) and rents it back to them... but then the terms are so awful that the Seller winds up having to move or gets evicted.

c. Seller does not have an option or right to repurchase the property. The only way that a Seller can re-purchase the property is going through the process than anyone else would go through to buy a home, and only if the Property goes up for sale.

d. A notice of cancellation is attached to this Addendum. There is a Cancellation Notice that is detailed below.

e. Seller represents that English is the language principally spoken by Seller. Yay! No taking advantage of our English-as-a-Second-Language Community!! People come to America for the American Dream. Part of the American Dream is home ownership. How dare ANYONE screw them over- regardless of their foreclosure situation!

f. No consideration shall be paid to Seller prior to the expiration of the Seller's right to cancel the Contract. This is the part that prohibits, "I will give you XX dollars and take over your payments." Nope. Not allowed anymore (unless drafted by an attorney). I have heard the horror stories of Sellers agreeing to this and finding out a few months later that the "investor" has not been making the mortgage payments.

If any of the above 6 conditions are changed, modified or amended at any time prior to or at Closing, the parties agree that the Contract to this Addendum shall be void and in no effect. If Buyer and Seller do not agree to one or more of the 6 conditions, then the Contract and this Addendum are void and in no effect.

In HUGE BOLD font it goes on to state that the Buyer, nor anyone working for the Buyer CANNOT ASK the Seller to "SIGN OR HAVE [THE SELLER] SIGN ANY DEED OR ANY OTHER DOCUMENT" before the agreed upon cancellation date.

Stop Sign What IS THE Seller's Right to Cancel?

There is a separate form, approved by the Colorado Real Estate Commission, which gives the SELLER (yes! The SELLER!) the right to cancel- without ANY penalty or obligation, under the following circumstances, and "in addition to any right of rescission available under state or federal law":

1. The Seller has the right to cancel the contract with Buyer until 12 Midnight of the 3^rd business day following the day on which the Seller signs a contract that complies with the Act, or

2. Until 12 noon on the day before the foreclosure sale of the residence in foreclosure, whichever occurs first.

*Please note:
• In Colorado, EVERY licensed real estate agent is a Broker.
• This is the FIRST time, in a long time where attorney involvement in a contract is MANDATORY, under certain conditions.
• This Addendum is to be a part of ANY Contract to Buy and Sell Real Estate that involves a residential foreclosure, in the state of Colorado.
• This Addendum was created to conform to the new COLORADO FORECLOSURE PROTECTION ACT.

What I love about this new Act is that it really defines what is and is not acceptable when dealing with a Property and a Seller that is in Foreclosure. It protects the Selling public from going from a bad situation (foreclosure) to a worse one. It closes the loophole that so-called "investors" take advantage of when trying to get their slimy hands on more properties- or, yet, more money.

More Acts like these need to be initiated across the country, if they haven't been already. Of course, the public needs to be educated (that's OUR job, as Realtors® and lenders) but first and foremost, they need to be PROTECTED, which is what this Act is designed to do.

(I know. I know. There ARE earnest folks out there- folks that really, really want to help. All my 'Investor-Hatin' obviously does not apply to them.)

**Update... This act in no way affects the foreclosure process or the ability to "short sale" a property. This act was intended to protect distressed sellers from private investors- not lenders or banks- from offering shady and potentially detrimental alternatives to foreclosure, to the unknowing public.**

READ MORE ABOUT RECENT FORECLOSURE SCAMS HERE There ARE scammers out there taking advantage of homeowners.

Posted by Mariana Wagner ~ Colorado Springs REALTOR® on 01/12/2007 08:39 AM

Comments (53)

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53 Comments on Foreclosure Vultures ... BEWARE! (Colorado's NEW Foreclosure Protection Act)

JAN

2007

Hey Butterfly, you will have to let us know how the new Act works; something has to work! And yes, I'm agreeing with you, I do not want you to take away my soap! Vultures are pretty, Foreclosures are ugly.

Carole~ First, I agree... vultures ARE pretty, but not the ones I was talking about. Second, you are right.. I did not talk much about the new Act- just the new form that came from it. HERE is a link to our new Consumer Protection Act where the Foreclosure Protection Act is Part 11. But, here is a bit from the general provisions as well:

"6-1-1102 Legislation declaration. The general assembly hereby finds, determines and declares that homeownership and the accumulation of equity in one's home provide significant social and economic benefits to the state and it's citizens. Unfortunately, too many homeowners in financial distress, especially thr poor, elderly and financially unsophisticated, are vulnerable to a variety of deceptive or unconscionable business practices designed to disposses them or otherwise strip the equity frmo their homes. There is a compelling need to curtail and prevent the most deceptive and unconscionable of these business practices, to provide each homeowner with information necessary to make an informed and intelligent decision regarding transactions with certain foreclosure consultants and equity purchasers, to provide certain minimum requirements for contracts between such parties, including statutory rights to cancel such contracts, and to ensure and foster fair dealing in the sale and purchase of homes in foreclosure. Therefore, it is the intent of the general assembly that all violations of this part 11 have a significantpublic impact and that the terms of this part 11 be liberally construed to acheive these purposes."

This Act is not meant to take away options- valid options, from homeowners facing foreclosure, but to help protect them from "deceptive and unconscionable" business practices. I believe that Colorado has put the consumer first- a wonderful thing that more states may follow suit in doing.
~flap flap

I have a feeling that we will all be hearing much more about foreclosures in the months to come. Thanks for the informative post.

Good post. I do not agree with some of your hopes and desires but it's a good post. In Colorado, a state viewed by most as a socialist state, we have common sense being legislated. We'll see how it turns out. I abhor legislation when it imposes itself on the citizenship in the stead of education and disagree that "more Acts like these need to be initiated across the country". All of these points are what I teach investors NOT to do. Common sense and common courtesy. Once again we do not need more legislation, we need more education. We shall see what this costs the citizens of Colorado and if it has any immediate or long lasting effects on the slimier side of my industry. Please also read this posting on what legislation can do to your industry and the citizens of your state. I am, by the way, a long term campaigner against unscrupulous investors, lenders and real estate professionals, and legislation which is always created by politicians with little or no knowledge of the industry upon which the regulations are imposed. Does something need to be done? You bet. I just do not believe this is the answer.

WOW! Does all this also apply when an investor is buying a foreclosure, non-owner occupied from a bank that is offering the house for sale? Or is it only when a buyer goes directly to the seller in trouble of foreclosure?

Good post guys, but I'm with Ken on this one-

"we don't need more legislation, we need more education"

As we heap on more and more laws people can claim less and less responsibility for their own actions - that's pathetic.

I DO NOT agree with people being taken advantage of, it's terrible. But they need to know what they're getting into.

Common sense is getting more and more rare every day.

Tony, thank you for your comment. There HAS to be an answer.

Ken, thank you also for your comment. Although I believe that education IS ALWAYS the answer, I must respectfully disagree that it is not the ONLY answer. Further, I believe that we (Colorado) are less of a "socialist" state and way more of a conservative state. It takes FOREVER to pass legislation- well, at least in Colorado Springs. That may change, though. Obviously, education has not protected the selling public enough, and that is why acts like these DO get enacted. I am also VERY PRO SMALL government- but not at the expense of the people. This IS sad- sad that something like this even NEEDED to happen. But it did. Too many consumers were being preyed upon by the very "investors" that you and I have both campaigned against. Unfortunately Common Sense and Common Courtesey are NOT too common anymore. Sad. I appreciate your opinion and will follow your link and get back with you.

Great post, Marianna, and clearly muched-needed protection given the increasing problem - both short sales and foreclosures. There are restrictions in CA too about how these properties are purchased, the types of contracts used, etc. A big issue for agents is not getting involved with properties where the buyer is an investor who is NOT going to live in the house. We can get in big trouble in that type of deal, vs. one where the buyer WLL live there. Our company attorney is running a seminar next week for all agents on this very issue - we clearly need to undretsand more to avoid putting ourselves, and our clients, in jeopardy.

Good for Colorado! I lived there for a few years and this was certainly needed.

I have worked with clients who were in foreclosure, and you are right--the vultures lurk. We would at least try and get their homes sold during the redemption, so we could prevent any black marks on their credit.

Although we were successful in some cases, there were many we could not help.

Thanks for the article.

Rich

Donna- This only applies to dealing with the seller until the foreclosure sale date of the property. This has no effect on bank-owned properties. I dont think banks need this kind of protection. ;)

Marc-Thank you for your input. Like with Ken, I agree and must respectfully disagree... Ok. Yes. More legislation CAN create less responsibility. Or, it can create MORE liability to those who choose not to use their common sense. I did agree that we need more education, but it hasnt helped us thus far- we keep reigning as King of Foreclosures and something needed to be done. We, personally, pride ourselves in educating sellers that we talk to that are facing foreclosures, whether we can help them directly or not. We also do our best to educate "investors" that we come into contact with. Maybe this new legislation will spark more education, but until then I believe that this law is necessary to protect the "homeowners in financial distress, especially the poor, elderly and financially unsophisticated, [that] are vulnerable to a variety of deceptive or unconscionable business practices designed to disposses them or otherwise strip the equity frmo their homes."

Jeff- It IS our duty to protect ourselves and our clients. Unfortunately, this is not easy. But, hey - We did not sign up for easy, right?

Rich- Yes. We can only help those we come in contact with. Our foreclosures are so out of control that there are MANY that we cannot help. Hopefully THIS act will help protect them.

I can't help but echo Ken Cook's comments (not that that will surprise anyone).

Thank you, Brian for your comment. I guess I do not understand how this legislation "imposes itself on the citizenship in the stead of education" as Ken mentions. Maybe someone can clarify this?

Further, I am very interested in people's ideas on how education, alone, can fix Colorado's massive foreclosure problem and the people who prey on them. Any ideas?

Mariana- Great Blog !! Thank you for the information !!

I just had an Agent / Vulture call me yesterday offering $35,000 less on a home that I have on the market that is actually one of my own properties...I thanked him for his offer and was insulted, but I maintained a low key professional attitude....He immediately jumped into Vulture mode !! He told me that the foreclosure rate is really high and this is my opportunity to get out from under... blah blah, blah...Then I responded to his Vulture mode...I told him that his offer was actually insulting and that the foreclsure rate is not an issue for me and that his offer was not an opportunity...Just insulting....Then I informed him that there are no liens on the property at all so I don't have to worry about the foreclsure issuse....I already have my home priced below market....

It occured to me that he is going onto the MLS and looking up homes that have been on the market for awhile and just lowball offering on just anything and everything. He is definietly a Vulture !!

As a "foreclosure expert" myself, (ha ha ha) I'm siding with Ken. When legislation begins down the slope of "protecting the innocent" and it turns into "protecting the uninformed from themselves" things tend to get out of hand.

And this goes way beyond just real estate. You can look at seatbelt laws, helmet laws, gun laws - it goes back to personal responsibility. And I'm speaking from experience; I do my foreclosure bailouts for only 1 point, no more because most of these people have very little money to begin with - and I've gone as low as 1k if only so they can get more back. Sometimes the situation is out of their control and they're my customer, not my enemy so there is no reason to take from those that have nothing.

I side with Ken. What should have probably been done either before this legislation or in conjunction with it is harsher, less complicated and more swift punishment of the existing laws (accepting that there even were existing laws). Laws are only as good and the enforcement behind them.

Cool, Blueberry. :)

Thanks for the explaination, some times hearing things my than once helps.

Lauren- They ARE out there. Good thing you are out there protecting your client!

Christopher- I appreciate your insight. It's nice to know that there are people out there who are looking out for their clients' best interests. It is what we all should do. I do have 2 things to address about your statements, though:

"protecting the uninformed from themselves" I believe that this act does not protect sellers from entering foreclosure. That is not it's intent. THAT is where lenders and Realtors have the duty to EDUCATE their clients. This act is not protecting sellers from themselves. It it protecting them from predators who put people from bad situations into worse ones.
Finally, and this is SUPER IMPORTANT to understand... This act does not prohibit ANYTHING... any investor can offer any seller anything that they want to. What this Act does is says, "Hey Investor, if you are interested in this property and all the conditions (above) are not met, then you will need an attorney to draft it all up for you." So, if an investor really IS out to do "good" and their business practices do not fit under the COLORADO FORECLOSURE PROTECTION ACT guidelines, then all they need to do is have an attorney (not a Broker) write up the contract. If it really IS above board, then there should not really be a problem then, right?

I sincerely DO appreciate all your insights. Thank you.

Dena- There is SO MUCH to this. I dont know much about the foreclosures in Pueblo, but the links n my post go directly to the new Act as well as the new state approved forms. Thank you for stopping by!

I'm curious, Ken Cook, what specifically do you have an issue with the above addendum?

Mariana: I didn't say education was the only answer, I said legislation is not the answer. You just wait until by some quirk of the law that this legistlation personally affects one of your clients in a negative way. Legislation is sweeping and broad even if it is well intentioned. It is, by nature, the proverbial "tossing the baby out with the bathwater". It rains on the just and the unjust. ;)

Mikey: I don't have a problem with what the legislation says I have a problem with the fact that it is a government limitation on private business and will ultimately harm those it was intended to protect at a cost to the citizens of the state of Colorado. I always have a problem with that.

Someone asked how education could fix this. Actually we don't even need any more education - the information is out there already. Don't get your butt in such a crack that you face foreclosure. If you don't make the payments on your home the lender (who actually owns the home) gets to determine the destiny of the property. I'll give you this; we, as lenders, must send a notice of default. We would be willing to send a letter which says, "You are faced with the prospect of losing your real estate investment because you are failing to make your payments as agreed. You may receive offers on your property far below the actual value. It is recommended that you seek the advice of an asset protection specialist before you accept any offers. If, however, you have not come to an agreement with a buyer and closed on the sale of the property within the next 90 days we will continue with foreclosure proceedings and file the Notice of Trustee Sale and sell your property on the courthouse steps at which time you may not only lose any equity you may have established but you may also be liable for the amount of your existing mortgage obligation not met at the time of sale whether it be at auction or at a later date."

Brian Brady: Stop it. People will talk.

Pear. Hmph, pear.

Mikey- Nice to see you on one of my posts!

Ken- Thank you for your responses. This is not about stopping homeowners from facing foreclosure, it is a set of guidelines for investors (and their agents) on how to submit an offer to a distressed seller. The only limitation is that the offer can either follow the new guidelines or be drawn up by an attorney. I do not see a problem in that. Further I do not see it as a sweeping and broad. The only people that I see as potentially NOT benefitting from this would be predatory investors ... and I am ok with that. However, all that said... I do not have a crystal ball and do not know the ramifications of this new act. But, IMHO, I believe the good outweighs the bad, especially in Colorado where there were, "A total of 29,630 Colorado properties entered some stage of foreclosure in 2005 - 1.62 percent of the state's households." There are a lot of distressed sellers out there.

(Brian- Too late... People are already talking ...) :o)

Mariana by the time you reach my age you will see the problem with government interfering in your line of work and how it hampers honest people from doing as they please without "permission" from Uncle Sam. I don't need a crystal ball, I've lived through it again and again and again. You just hang in there and keep asking questions, apricot.

Ken- I appreciate that. Although I do not completely agree with you on these points, I will continue asking questions ... and finding answers. I HAVE seen government interfere with many facets of many lives. IFor example, I have worked in special education for many years and have seen legislation passed that has worked wonders and benefitted many, and legislation passed that has been a nightmare. I guess that ideally we should all Do The Right Thing ... but laws exist to protect us from those who do not. Legislation will never be all good to all people... I guess there needs to be a balance ... but that balance is seen differently by different people. It is a hard line to draw. That is why I appreciate state level government. If you noticed, I never said, or implied that this should bea national adoption- just that more states should adopt something like this- and interpret it to their needs. I still believe this. Again, I value your insight. :)

Mariana,

Very interesting post and very timely. I am enjoying the comments as much as the post :)

Great debate...

Cherry

Mariana - great information-filled post. I need to re-read this again to fully understand it, and appreciate you bringing it to our attention. Like MoniKa, I'm appreciating the comments here as well as your post.

Gooseberry

Ann

"I have a problem with the fact that it is a government limitation on private business and will ultimately harm those it was intended to protect"

Ok, how will it harm those it was intending to protect, I'm not saying the "harm" in this addendum yet so I was wondering if you could educate me.

saying = seeing

Monika and Ann- Thank you for stopping by! There is a lot of information to absorb regarding this new act. :)

Mikey- I agree with you on this. I do not see the "harm" that this addendum is causing either. I really appreciate your input on this.

Here is something to consider: Predatory Lending Laws... Section 32, Regulation Z (Home Equity Protection Act) ... points need to be disclosed (front end/backend) and total points can't go over 7.99% w/o disclosure... etc. (I know. I know. A can of worms...) My point is that this came into place to protect the public- a public who does NOT know about back end points/mortgages/etc. THey trust the lender to do right by them- because the lender is the expert, right? The lender has a distinct mortgage knowledge EDGE over the consumer, and rightfully so.

Well, this is along the same lines... This act is in place to add DISCLOSURE to the investor (who has a distinct "financial savvy EDGE over the obviously non-savvy consumer...) when dealing with the foreclosure public. No matter HOW MUCH we educate those in foreclosure, we can never expect all of them to fully understand the liabilities and potential risks involved with getting out of a foreclosure via an investor. They are not the experts. They are not in a good situation and may jump at any opportunity to "free" themselves. It is a survival instinct. This addendum creates a disclosure to the Seller regarding the terms of the sale to an investor- or mandates that any other offer be run through an attorney.

We should also note that, in addition to the EDGE that they have in the situation... "investors" are not regulated like lenders and Realtors. There is no one holding them accountable and there are too many loopholes. This Act creates a bit of accountability/disclosure for a group of people who deal with the public. I see nothing wrong with this.

JAN

2007

"to protect the public- a public who does NOT know"

So beautifully said! Educate, don't legislate. If the public KNEW then there would be no need for the legistlation. I say again, the legislation may indeed protect the ignorant but as sure as the sun rises in the east and sets in the west the legislation, as all legislation does, will harm the innocent who HAVE THE KNOWLEDGE and choose to excercise their FREE WILL by making illegal and act which should be a matter of choice.

Vote to keep government out of your business and use the savings to educate your clients. Banana.

No. I do not believe that at all. It is not the public's job to be experts on mortgages, real estate, and all aspects of foreclosure. I trust my doctor because I am not an expert in medicine. I trust my mechanic because I am not an expert in engines. People in a position of trust- people who ARE experts in certain fields have the obligation to protect those who are not. If that means that legislation needs to be passed, then so be it. I can educate until I am blue in the face, (and I have done that...) but I will never reach EVERYONE, and even the ones I DO reach may not understand it to the depths that I do.

You and I may have a philosophical difference of opinions regarding legislation. Or, becasue you and I are in different states, there is a fundamental misunderstanding to the cause of and reason for this act to begin with. It is entirely possible. Either way, we may not come to a middle ground on this subject. That is ok, though.

But anyway... I believe that there should be some laws protecting the public from bad people. It is illegal to rob people- and this act is a facet of that very law. Because humans are, well, HUMAN... we do not all think, act and behave the most righteous ways. Some far worse than others. Laws act as the balancing force and NO- any law will offend someone. But I believe it to be a necessary evil. (Side Note: I guarantee that I am not of the political affilliation that you think I am.) But, I also do not see how this law- a law that is for the public- could EVER affect MY business, unless I am representing a "private" investor in a "shady" purchase... But I dont practice business that way.

And this act is not even saying that anything is illegal... It just says that if the "offer" does not follow the guidelines then it needs to be drawn up by an attorney. There are plenty of states where attornies draw up contracts anyway.

Did you read my update? I read your latest post and believe that maybe you misunderstood something. This has nothing to do with the foreclosure process, short sales or any options that a distressed seller has regarding foreclosure. Nothing. Here is my update...
**Update... This act in no way affects the foreclosure process or the ability to "short sale" a property. This act was intended to protect distressed sellers from private investors- not lenders or banks- from offering shady and potentially detrimental alternatives to foreclosure, to the unknowing public.**

Again, Ken- Thank you for your thoughts on this subject. It is appreciated- whether I agree or not... :)Kumquat

Mariana, Don't know how I missed this one. Good stuff and a very good conversation going on. Currently 15% of my listings are preforeclosures. My sellers are constantly calling me with the newest "solicitation" they have just received from the kind person willing to take their property off their hands. Most are just wanting the sellers to quit claim the property over and then the investor will either rent it out or try to flip it for a profit. In almost all cases the seller is still responsible for the mortgage. The problem is when the investor doesn't make the payments. This happens when they can't rent it for enough to cover the mortgage or they can't flip it fast enough. My experience with the sellers is that they are under a lot of stress and just want the problem to go away. They are sitting ducks for any one that can throw them a "life line" whether it's real or fraudulent.

From what I understand of this new law. The only thing it does is require an Attorney to write the contract under certain conditions. It doesn't look like it prohibits the investor at all if he is legit. In my opinion it's a good thing.

I'm not a fan of big government so it will be interesting to see how this law plays out. My guess is the investors will start making friends with struggling attorneys who want to make a quick buck. :)

Thank you Bryant, for sharing your experience and your insight. We also work with several pre-foreclosre- short sale situations. The solicitiations can get obnoxious... I do agree with both you and Ken on the fact that Big Government is not in anyone's best interest, but I also do not see this as a move toward big government... I guess we will all just have to see how this one plays out.

I will keep eveyone posted... throughout the years. (We will all still be here on AR, right?)

Bryant! You think like a shark and that keeps us guppies alive! I hadn't even thought about the pay-o-la aspect. Yes, you are probably right. There is always a way around it for the shady dealers ... it's always the just who are limited in their honest deeds by the justice system.

Mariana, my sole objection here is government interference in free enterprise. And, by the way, I do not trust my doctor nor my mechanic. I research EVERYTHING they say and have cured myself of ills in ways my doctor assured me would not be affective. CHERRY! Bingo!

Ken- I also do a lot of research on my own, as well. But I am not planning on going to school for every aspect of my life .. and I even LOVE school. I guess I still do not see how this Act limits free enterprise of honest do-ers. In agreeing to disagree, I wish you a great weekend! (pear)

Thanks! You have a great weekend, too. As I tell my son who loves to "test the waters" on his own and is proving it by never visiting his dad ... well, that's a different story ... I've already seen it. Been there, done that and got the T-shirt. I've seen it hundreds of times in hundreds of other government attempts at correcting a civil wrong. It's just a perk of having been in the business and on the earth for several decads. It's also the reason I listen to my elders like Brian Brady. Youth has its priviledges. Hindsight is not one of them.

CHERRY! Bam! That's two on YOUR blog. One more and I win the prize.

Mariane ~ Since you asked me to comment I will. This whole Colorado Foreclosure Protection Act appears to be a knee-jerk reaction to problems we have had in the past. It is a shame that unethical people take advantage of uneducated homeowners in distress but IMHO this is a law that in not well conceived.

The timing of this law is even less of a blessing. We need to have legislation that enables sales to occur, not prohibits them.

I understand what it is trying to do. I also understand the spirit of your feelings, I totally agree predatory bad actors should not be allowed to profit on the backs of homeowners, but legislating this is NOT GOING to stop the BAD Guys. What will happen is the good guys will go invest in something else. Increasing the glut of homes, and also desperate, up-side-down homeowners. The Act will just raise the temperature in the pressure cooker.

Setting terms for selling a home to include "Seller represents that English is the language principally spoken by the Seller" is prejudicial.

Yes, sure then when they can't come to the 6 terms they get to go spend more money they don't have on an attorney, who of course is much more ethical than a REALTOR®. We all know there aren't any bad actor attorneys out there don't we?

So now we have a foreign national who is in financial trouble who now needs to spend more money in order to sell his home. Now if he could speak English, he could sell his home. What is wrong with this picture?

America home of the free, land of the brave where everyone is equal, unless you don't speak English?

I wish fixing this problem were as simple as passing legislation. It's not. It's just one more piece of paper that will be abused by unethical people who don't care.

There's my 2 cents.

P.S. You shouldn't hate investors so. Most are good people who will in fact pull this market out of the dumps. I know I've seen it happen before. This too will pass.

I think laws may have originally been conceived to protect all of us the majority of the time. Unfortunatey they can be a double edged sword or get out of hand. The attention that foreclosures have gotten in Colorado have just created a stage for actors of a different kind. Those actors don't necessarily have the good of all of us in mind.

Ken

JAN

2007

Ken- Times are always changing. We must always learn from the past and prepare for an unknown future. Sometimes I think my 3 year old has all the answers...:o)

Kristal- Thank you for stopping by and sharing your 2 cents. I really appreciate it. It is nice to hear the opinion of a fellow Colorado broker regarding this. I DO agree about the possible prejudice regarding this act, and believe that THAT will be the first hurdle in making any of it work. And rightfully so. That part of the act was not very well thought out.

Also, my "investor" hatin' has nothing to do with real investors. I know that there are many, many investors who know what they are doing and are creative enough to make wonderful things happen in bad times. I am talking about those "investors" who really are not really investors because they are not investing anything- just trying to make a quick buck off the backs of the distressed. Heck! I am an investor, but not that kind.

Ken S.-You are right. When one door closes and another window opens- both for good guys and bad ones.

Oh, Kristal. You are always, usually ... no, always, such a breath of fresh air. Sorry that Colorado is percieved as a socilalist state. I'm from Georgia and I don't know anyone named Bubba, have never dated my cousin, and ... well, maybe I did that, but we are not all tobacco chewing, beer swilling, gun toting, rednecks. Well, I don't chec tobacco.

Marianna, bless you. Times change but not that way. That would be too ideal. You just keep believing that government regulations do good and I'll keep teaching investors not to be sharks and minnows not to get eaten. Shucks, Lime. Guess I'll have to make a marguerita.

I have faith in a lot of people and a lot of situations. In most situations I am very anti-legislation. But I have seen way too many people hurt in this situation - maybe things work differently in Georgia.
We also do a lot of teaching- both to foreclosure bound sellers and to all of the investors that we work with. I am a teacher by trade and and educator by nature. It is what I do and I believe in it whole heartedly. I ALSO believe that education is a better answer. I never said that legislation is the only answer. It is an answer and I would hate to see the state of the world if there were NO laws or judicial acts.

AUG

2007

There are ethical ways to invest in foreclosures that do not hurt the homeowner. Can you get the home sold before the bank forecloses? Most of the time the owner doesn't have time to wait 6 months for a realtor to sell the home. Sometimes their only option is to sell to an investor who can perform and close. Now there are a lot of scams out there that is for sure. But if the homeowner can sell the home and get some of their equity and move on that's good for them. Having a listing sit for 6 months while the owner loses their home is very bad for them. Hopefully you're helping owners by listing them. I know many realtors who can't sell a home fast enough to help the owners.

Hello, and thank you for your comment. You are absolutely right. If an agent can sell it before the bank forecloses, then that is usually a wonderful thing. However, if a seller is in Foreclosure, then there are certain precautions that need to be taken.

Luckily, if a Seller can price a home effectively, it will more than likely sell before the bank takes it over. The problem that we are seeing is that Sellers are not contacting agents until it is almost too late.

My advice to Homeowners facing foreclosure: Most agents understand that hard times fall on people and therefore, will not judge you. As soon as you know that you may lose your home in a foreclosure, please call an agent who has experience in effectively dealing with foreclosure situations. They should be able to get your home sold before it gets ugly.

AUG

2007

Mariana

It took a law to put seat belts in cars.

It took a law to put air bags in cars.

It took a law to rid us of the 'brown cloud"...okay not "rid" but "lessen"

Some times protecting people takes a law

Rob - laws will never be more powerful than knowledge. Education not legislation.

Rob and Ken

I think there is a balance. Sometimes legislation HAS to happen in order for people to become educated.

JUL

2008

Ever heard of the pot calling the kettle black??? This sounds like a Realtor (aka VULTURE) to me. So how did so many Colorado homeowners end up getting foreclosed to begin with??? Answer: REALATORS, who sold them homes they couldn't afford because the higher the home price the more $$$ they make! These VULTURES charge 3% to 6% for what??? Listing a home on the MLS and showing it a couple of times, what a joke. Then they shove a pen in their CLIENTS hand at closing to sign mortgages they can't afford and 2nd mortgages just to come up with the "down payment" they never had. Zero Down Loans, 5 Year ARMS, who exactly advised their clients this was a good idea? Ever heard of ETHICS and FIDUCIARY DUTY or did you sleep through that class during your extensive education to become a licensed VULTURE? Do you truly believe you are helping someone out by SHORT SELLING their home? I'm sure you waive all your commissions on those sales, don't you??? I'm glad you are so supportive of new legislation, because changes are coming your way too... Yes, hope you had a good run. Things may be bad for REALTORS now, but they are about to get much worse. By the way, deleting this comment will only validate its truth.

Mr. Don't Delete this Comment, Sounds like you woke up with a foreclosure notice in your hands this morning. Whose fault is that? It's not your own? You didn't see the mortgage payments and decide you could afford it? You didn't find the house you asked your Realtor to find for you? Were you drinking? Signing documents while drinking is considered under duress. How did that pen get in your hands? Was it super glued? It sounds like you should be taking your issues up with your lender/mortgage person, not the realtor. We have no say in what house a buyer wants to buy. We show houses according to the approval level the mortgage person gives the buyer, and the buyer tells us the range within that approval that they want to stick with.

Don't worry, I am not deleting your comment. You were polite enough not to throw out explicatives and I thank you for that.

I am sorry you had a negative experience with a real estate agent and understand your want to rant. However, I am having a great career - as are many other agents I know. - and not off the backs of the home byuing and selling public. A lot of us are ethical and know what we are doing. My business is built off the service leve I provide my clients. I am sorry if you never got to experience working with a true professional, but painting "us all" with the same brush is erring on the side of ignorant.

Ultimately, it is the home buyer who makes the decision to buy a home when they know they cannot really afford it.The loan they choose is between them and their lender. I am not a lender and am not trained in the field of lending. My job is to find homes for home buyers, sell homes for home sellers and negotiate contracts. Yes... bad things happened in the lending field and although there were a few bad apples doing shady things, there are scoundrels in EVERY profession ... even yours. We are doing everything we can to right wrongs.

Also, you speak of listing comissions .... this article is about purchases, not listing contracts.

Thank you for leaving your name, and good luck with your future real estate investments.

P.S. You should go visit HousingPanic.com ... Right up your alley.

... and by the way ... this legislative act is aimed at helping homeowners, not real estate agents.

AUG

2008

WOW! I just happened to stumble over this blog, and I am nearly choking here. Mr. "Don't delete this comment" hit the nail on the head. Holy moley! You really must educate yourself a little bit better on this topic because this is the kind of ignorant stereotyping of a group of professionals, most of whom feel very strongly about how they help people to avoid the big foreclosure.

Seems to me that you are going on about are folks with equity (subjective, certainly in this market) who have been swindled by swindlers. You know there are bad people in all professions (take Catholic Priests for example) but to hurt away at anybody involved in the disposal of financially distressed properties and genuinly helping people avoid the worst, is just down right ignorant.

Here's a scenario for you Mariana. True story. Ya see, a little over a year and a half ago, I saw the writing on the wall. Perhaps because all the poor folks out there were calling me to refinance them, but of course that was not possible. Because I HATED having to call and turn-down these good desperate folks, I studied my hind-end off harder in 4-5 months than I did in my entire 4-years of college to LEARN how to help these people. No equity, poor credit, upside-down, perhaps other personal financial issues I learned how to address.

So, while you may be ranting at the few crooks out there preying on the un-eduated and un-informed, here's what the rest of us are doing (This is short-sale negotiations by the way, and yes we do get paid. Don't you?): Mind you, this is typically at least a 3-month process - but the end result is this -

Bank gets what they agree to take. Seller avoids foreclosure (they have negative equity and are being forgiven significant amounts of money based on our professional due dlilligence and negogitations witht the lenders). A couple of Realtors or sales associates usually get paid, and the new retail buyer gets a stellar deal as well.

You might do well to change your tune a bit. It may behoove to work with an ethical foreclosure specialist. Did I mention there are a number of us that also assist with loan modification mediation to help those who are simply the victims of sub-prime mortgage adjustments. My favorite Realtor, who unfortunately moved off to Florida right before the storm, made over $10K his last month from me alone based on the short-sale listings I gave him.

P.S. I just read your last response and I cannot believe what I am reading, in light of the way you ignorantly slammed an entire profession to kick off your blog! I'm sorry, but whew!!

"I am sorry you had a negative experience with a real estate agent and understand your want to rant. However, I am having a great career - as are many other agents I know. - and not off the backs of the home byuing and selling public. A lot of us are ethical and know what we are doing. My business is built off the service leve I provide my clients. I am sorry if you never got to experience working with a true professional, but painting "us all" with the same brush is erring on the side of ignorant.

Also, the new legislation is for the criminals. I have more disclosures in my contracts by far. All clients that work with ethical foreclosure specialists are thoroughly disclosed. Disclosure, disclosure, disclosure. There is nothing to hide. It is what it is.

AUG

2008

Patrick-

First of all, if you actually read the entire post and not just skimmed over it and assumed you knew what I was writing about, you would see that I am talking about scammers who pose as "investors" ... If this is not you, then I do not understand why you (and others who have commented here) seem to be taking such offense.

I did not "slam" an entire profession to kick off my blog. I have had a successful blog and career WAY before I found the need to educate the consumers about scammers posing as "investors" in this post.

I, myself, am ALSO an investor - but not in the way that I describe in this post.

OCT

2008

It's really great that a state has passed laws to protect homeowners against foreclosure predators. more states should consider this. Homeowners in foreclosure should learn what is a short sale in real estate to avoid foreclosure. Real estate short sales provide a great alternative to foreclosure.

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