Mortgage Brokers and Loan Originators are exempt from becoming a “Distressed Home Consultant” when helping Distressed Homeowners refinance, unlike real estate agents who are subject to increased liability under the new Distressed Property Law. My question is, SHOULD mortgage brokers and loan originators be exempt? Please read this blog post and share your opinion. I know that no brokers or loan originator is going to automatically jump up and vote for increased liability, but do you see a possible loophole for LOs to target market and prey on distressed homeowners? Have you heard of anything like this happening in your market area?
60 thoughts on “Distressed Property Law”
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No!I do not believe we should be exempt nor should Re agents. I believe the majority of agents and LO don’t have a enough knowledge to guide homeowners through the process and since the law is so poorly writen with loopholes to be “FOUND” for scammer’s
I know the job still needs to be done.But not used as a “new market”I also believe it should be left for a short sale/forecloser lawyer to handle who know’s the in’s and outs of the law and has their own liability’s they follow Then maybe so many would be able to capitalize on it!!
Since I specialize in reverse mortgages I don’t get involved in this field at all. I can’t decide if loan officers should be exempt from becoming “A Distressed Home Consult “or not. My general feeling is this,if you go after this sort of business you have a fiduciary client. If you have a fiduciary then you should be held to a high standard. If the law were to cover LO’s then i think it should also cover brokers and lending institutions. I believe the intent of the law was to protect home owners.
I believe mortgage brokers and LO’s should be exempt from becoming “A Distressed Home Consult.” That is the real estate agents job. Our field is to place the borrower in a mortgage and
mixing two job descriptions confuses the process. There may be some loopholes for unethical actions on behalf of the LO/mortgage broker
but I think with guidelines being so strict today, it will be rare.
I do not believe that the LO’s should be responsible when helping buyers. The Real Estate Agents have the responsibility to the seller, making the Agent responsible. As a LO I choose to work with Real Estate Agents who are very experienced in this specialty. In my experience it makes a lot more work if the seller’s agent is not trained in this area. I prefer my clients work with an agent who will look out for their best interest.
It would seem difficult to me to assist the seller’s agent with in a transaction. Distressed properties can be like opening Pandora’s box, and should be sold to a client who understands what the financial implications can be.
In general most agents I’ve worked with do only the minimum required to close a transaction. They need further training to be the professionals the present them selves to be. Maybe a financial penalty would help them be honest.
Distressed property Law… This is a stupid law that does not apply or even help consumers and will be soon repealed. Speculation of sometime in 2010. It was snuck in to a bill as a little thing I like to call PORK… What it does is ties the real estate agents hands so that they can not work fully with the client’s best interest in mind. Granted there are a lot of agents out there that have gone on “iwanttobeanagent.com” and printed there $9.99 RE license and are now agents. No they are not… Being an agent is a lot more then just holding a piece of paper… As far as Mortgage professionals being under that law… NO we are not nor should we. I am a professional and no not need more restrictions or liabilities then I already have.
Once again we have new govermental regulation, which often comes without the teeth of enforcement hitting the legislative books. Yes, distressed homeowners need protection from the “wolf packs” but I see too many flaws in this attempt of protection that easily could result in real estate professional not wanting to take on distressed clients. Why add to your exposure to legal sanctions. If one wants to take distressed properties on as a specialty, and learn all the ins and outs of the law I can see this as a beneficial law in the real estate industry. However, if there is any indication of increased lack of real estate assistance for the distressed seller due to the added legal title of “distressed home consultant” clauses, the law could be considered counter productive.
Should there be new regulation and enforcement would it truly make a difference for distressed homeowners? I don’t think so. All parties involved must make the decision of ensuring the transaction is handled in a professional manner that benefits the consumer first then the pocketbooks of the RE agent and LO.
LO’s and Brokers should not be exempt. I agree with Michael when he said, “whoever is helping the distressed homeowner, and is in a position to make money off of the distressed homeowner, should be covered under the new law”. Because of all the unethical transactions that have occured in the past we need to start holding all in the industry accountable for their part.If everyones on the up and up why should we be worried about increased liability. Bring back accountability, and integry to our industry.
LO and Brokers are already licensed. Part of their loan origination job is helping the client understand what they are doing (short of giving legal or tax advice.) When its obvious the client needs go beyond simply getting a loan they should be referred to a professional with the appropiate expertise. I assume a “distressed home owner” is someone who needs more than a LO to make the best of their situation.