Rob McKenna (WA state Attorney General) was the main speaker at the REAPS meeting on Thursday night. He came to talk about the Distressed Property law that became effective on July 12, 2008. The law was also known as HB 2791 as it passed through the legislature.
Rob started by describing the history of the law and also a bit about the Consumer Protection Act. The AG office originally wrote suggested legislation to address certain types of real estate transactions that were frequently fraudulent.
In all of these types of transactions, the homeowner was in default and were approached by people offering them assistance. The fraudulent transactions involved ‘equity skimming’ – which is defined as buying the home and leasing it back to the original owner with an option to allow the original owner to buy back the property at some later date. In the fraudulent cases, the terms of the lease were setup in such a way that the orignal owner was not going to be able to succeed and get their houses back. This is, of course, fraud. Every case that Rob described was actually prosecuted under the existing Consumer Protection Act (CPA).
I later asked Rob why new legislation was introduced when the CPA was sufficient to prosecute these cases – he indicated that the purpose was to regulate these types of transactions to make it clear to the investor how to legally / ethically execute this kind of transaction.
The problem was that the Senate committee chair decided to drastically change the proposed law and add a lot of extra badly written ‘crap’. This included language to define a ‘distressed home consultant’ and a ‘distressed home conveyance’. The language is so bad that Rob admitted that his office does not understand it and is focused only on the part of the law that they originally proposed. Unfortunately, the law allows for civil penalties as well, so we all need to try our best to puzzle this out so that we can help the unfortunates that are trying to sell their house to avoid foreclosure.
Rob told us that the AG office is going to push the next legislative session to remove the bad additions to the law and return it to the originally proposed language. The Realtor association is also pushing to change the language since real estate agents are not exempt from the liabilities of this badly written crap.
As you can tell, I do have an opinion about this law!
Please write your congress-critter in Olympia to encourage them to restore the original language! [08/28/08] Joe added a comment and I read his blog and watched the video of the testimony. It sure looks like Rob lied to us about not supporting the new language. I have never liked any part of this legislation but thought that the original sounded better than what passed. When you call your congress-critter, please suggest that the entire law get repealed.
Restore the original version?
Rob took to the podium to describe the original version which focused on the 82% thing, and got it completely wrong, even though he read directly from the statute. He described 82% of the seller’s equity as being key. The law has nothing to do with equity.
Why would you want to restore that nonsense when the AG himself can’t even figure out his own law.
More importantly, the AG’s office has received four foreclosure rescue scam complaints in the last five years. They did not prosecute any of them under.
They did, in fact prosecute me, having done 300 foreclosure transactions without a single complaint. The pressured and bullied and threatened my partner into settling, and that’s the only so-called success they’ve had in this regard.
I, on the other hand, will not settle and will have my day in court to expose this nonsense for what it is.
Finally, the AG’s office was involved with the new legislation every step of the way. AAG Jim Sugarman testified in favor of the new and final version of the bill. Suggesting the AG’s office was against it is simply not true.
Joe Kaiser