Gentleman, Start Your Calculators

Posted May 11th, 2008 by Joe Kaiser

Or, maybe we can save a few bucks and get Ignacia Ramirez to create the spanish version?

Dear Rob,

Do you have any idea what you’ve now done to real estate agents with this new foreclosure rescue scam law?

Perhaps you should ask the Washington Realtors┬« and the NWMLS. They’ve got a few things to say about it . . .

Because the law is new and in some cases, ambiguous, it must be interpreted before it can be applied. Different lawyers and judges will interpret this statute differently. You are encouraged to seek the advice of your own lawyer in determining your approach to compliance with the law.warealtors.org

Ambiguous?

That doesn’t seem to agree with AAG Jim Sugarman’s claim, it’s “a very simple bill,” does it?


Core Roll

What isn’t ambiguous is that pretty much everything is different.

Essentially, the new law changes the core role of agents throughout the state, likely making them “foreclosure consultants” whenever dealing with anyone in foreclosure (but no one knows for sure, ambiguity and all).

Already, agents have clearly defined duties owed to sellers under Agency Law. Now, with the new law, they’ll also have fiduciary obligations as well.

But that’s just the beginning.


Documentation

Once the new law takes effect, all the standard listing agreements and purchase and sale agreements will be of no use (as of June 12, 2008, the current docs are unlawful).

Who’s going to pay for new docs for those agents, and what will that cost?

The old docs are already dozens of pages long, and are in 9 point type, or less. In some cases, much less. With those docs now having to be redone in 12 point type, or more, how many pages with the new documentation set be?

A lot. A crazy lot.


Farsi Anyone?

And don’t forget, should the agent be working with homeowners in any language other than english, the agreements MUST BE IN THE LANGUAGE THEY SPOKE, and BOTH the english and the other language documents put into use.

This is a really dumb idea. How is it that no one, apparently, imagined the mess it creates? How many versions of listing agreements will there now be in our state?

Dozens, at least.

Who’s going to create all those, and at what cost?

Or, maybe we can save a few bucks and get Ignacia Ramirez to create the spanish version?


Docs already signed

Listing agreements already in use with sellers will have to be redone. That means redrafting all the documents, making appointments with sellers, and hoping there won’t be problems getting things resigned.

How many hours will that take, and at what costs to agents and sellers alike?

Not to worry, we’re told, because the AG’s office is putting together a brochure to explain it all.

Good grief Rob, just what we need, another brochure.


Lots of Agents

There are currently 45,000 licensed real estate agents in this state.

That’s 45,000 agents who, as a result of this new law, now need to be retrained. If not, they could find themselves in a all kinds of trouble and subject to $100,000 fraud claims and who knows what else?

And because the law is so complex, the training will have to be non-trivial, probably a half day seminar at least, minimally, to barely cover the essentials.

Let’s figure $50.00 an hour for a typical agent’s time, figure 4 hours of training, and maybe $50 for expenses, or $250.00 per agent. That seems ridiculously low and misses more than a few costs, but I’m in a generous mood.

Here’s the “very simple” math . . .

45,000 x $250 = $11,250,000.00

That means more than 11 million dollars, Rob, just to get licensees halfway educated about your new law. Who’s going to pay for that?


The Scam

And by the way, how much did Foreclosure Solutions Assistance out of Clearwater, Florida, scam from WA State residents facing foreclosure? Wasn’t it something like $180,000.00?

Can you imagine the outrage had they stole 11 million dollars from 45,000 residents? Your Consumer Protection Division would be licking its chops.

My question to you, Rob, is which is the bigger scam?

And while you’re thinking about it, be sure to factor in that in the last five years your office has received a grand total of four foreclosure leaseback scam complaints (the type of complaint the new law addresses).


Aren’t I wonderful?

That 11 mil is only the beginning.

By the time agents are done paying their attorneys for help, and the translated documents are created, and the brochures are printed and disseminated, and agents are reeducated and re-reeducated as the new law gets tossed around and sorted out, (and who knows what else) . . . that 11 mil will look like chump change.

You’ve created a convoluted mess for no less than 45,000 agents whose job becomes that much tougher in a market already tough enough.

Did we really need to turn the entire Washington state real estate industry inside out and in the process, require agents to cough up tens of millions of dollars and waste hundreds of thousands of man hours, over four complaints?

Or, more likely, was it just so you can say . . .

I’m Rob McKenna. Aren’t I wonderful? Vote for me.

In the arena,

Joe Kaiser


5 Responses to: “Gentleman, Start Your Calculators”

  1. Chris responds:
    Posted: May 11th, 2008 at 9:13 am

    Considering a distressed homeowner can be…

    4. the homeowner believes they are likely to default on the mortgage within 4 months and tells this to, among others, a real estate agent.

    …essentially anyone who sells a house — your point is well taken.

    I also suspect this law will be used extensively in the future by anyone looking to back out of a contract. All real estate lawyers will know that they can say their clients should have been made aware of the protections this bill provided them, should a real estate agent have been remiss enough not to think it applied to their sale.

  2. Joe Kaiser responds:
    Posted: May 11th, 2008 at 10:01 am

    I’m guessing we can’t yet imagine the issues this new law ultimately creates.

    Probably time we start that “Unintended Consequences” list so we can track them as they happen.

  3. Chris responds:
    Posted: May 14th, 2008 at 2:54 pm

    FYI: “US foreclosure filings surge 65 percent in April” –
    http://biz.yahoo.com/ap/080514/foreclosure_rates.html?.v=5

  4. Chris responds:
    Posted: May 16th, 2008 at 2:17 pm

    Found this tibit in an article on California foreclosures today:

    Foreclosure flood: 1,000 auctions per day in California:

    With this excerpt:

    “The majority of these sales received no third-party bid and reverted back to the lender despite the largest across-the-board discounts ever offered at trustee sales auctions,” ForeclosureRadar reported.”

    http://latimesblogs.latimes.com/laland/2008/05/foreclosure-flo.html

  5. Ned Carey responds:
    Posted: May 17th, 2008 at 12:20 pm

    It sounds like this is similar to the bill Maryland passed two years ago.

    Maryland just passed emergency legislation making dramatic changes to the previous bill. Among other things you must be an agent to be a foreclosure consultant in MD. Yea like agents have a clue about how to negotiate short sales or loan modifications.

    One change in MD is you cannot use a quit claim deed. Why not, a quit claim deed is to the advantage of the seller!

    Let’s see, lets make it harder for someone to buy a property in foreclosure and make the seller give a warranty deed that puts them under greater obligations. Ridiculous, but I guess Joe you are already too familliar with such ridiculous thinking.

    Ned Carey


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