California is the land of opportunity, especially for real estate investors. I’ve made my fair share of profit from appreciation in California.
After all, a few years ago all you had to do was be IN the market to make money. There was a strong economic force pushing all the values up. But market values have now stabilized or decreased and the foreclosure rates are climbing. Lawmakers in California are expecting less-than-ethical scam artists to start showing up to take advantage of homeowners who are facing foreclosure. And they’ve come up with some pretty stringent laws to stop them. Before you start on your plans to become a real estate tycoon in California, take a minute to check out the laws.
Are you a “Foreclosure Consultant” under the definition of California law?
2945.1. The following definitions apply to this chapter:
(a) “Foreclosure consultant” means any person who makes any solicitation, representation, or offer to any owner to perform for compensation or who, for compensation, performs any service which the person in any manner represents will in any manner do any of the following:
(1) Stop or postpone the foreclosure sale.
(2) Obtain any forbearance from any beneficiary or mortgagee.
(3) Assist the owner to exercise the right of reinstatement provided in Section 2924c.
(4) Obtain any extension of the period within which the owner may reinstate his or her obligation.
(5) Obtain any waiver of an acceleration clause contained in any promissory note or contract secured by a deed of trust or mortgage on a residence in foreclosure or contained in any such deed of trust or mortgage.
(6) Assist the owner to obtain a loan or advance of funds.
(7) Avoid or ameliorate the impairment of the owner’s credit resulting from the recording of a notice of default or the conduct of a foreclosure sale.
(8) Save the owner’s residence from foreclosure.
If you’re a foreclosure consultant, there are very specific rules as to what the contract must say and cannot say. Additionally, you cannot later have any interest in the property.
Look for this to be a hotly litigated area in the future as the values in the real estate market come back up and disgruntled former homeowners want a piece of the action. I can just see the class action solicitations now! Make sure you have great advisors who understand your situation before you enter into any foreclosure agreement.