This is somewhat related since you are in Chicago. In Illinois there is a law that just passed the State Senate and is now in the State House…
SB 2349 Mortgage Rescue Fraud Act
Current Status Bill passed it’s 3rd Reading in Senate - today, March 2nd. It is moving to the House of Representatives for approval.
Defines how investors can do business with distressed property owners. Rather than enforcing laws against fraud, forgery, and deceptive practices it sets up unreasonable rules for engagement, and adds new penalties. Will limit the options of people who are losing their homes. On its 3rd amendment.
The Illinois Senate just passed a bill (SB2349) that targets the practices of real estate investors working with people that are in foreclosure, behind on their property taxes, or are more than 90 days in arrears on any loans secured by liens on their property. It is a complex bill with many aspects that are problematic. It rather broadly defines and then restricts the activities of “distressed property consultants”, and “distressed property buyers”. The bill is supposed to protect homeowners from criminals that are targeting folks in distress and using fraud, forgery, and deceptive practices to gain control of their property. While there is no doubt that such criminal activity is taking place, there is also no reason to add new complex legislation to address it. We need to enforce the laws we have. Eliminate crooks, not choice.
Here are a few of the standout issues in this bill.
• Any “Distressed Property Purchaser” must pay at least 82% of fair market value as determined by an appraiser. This “one size fits all” approach restricts the homeowners right to choose, and make the best contract to fit their circumstances. Government intends to interfere with the homeowner’s right to contract.
• All liens on the property must be paid off in full, when a “Distressed Property Purchase” takes place. This once again restricts the market, and will force more properties to go through the process all the way to the auction. Most properties that make it to the auction go back to the lender, or sell for $1 over. The homeowner loses all of their equity.
• The homeowner has an automatic right to cancel a contract for “Distressed Property Consulting” up until the time that all of the services have been completed. No payment can be required until after all services are complete. This part of the bill excludes “protected classes” like attorneys and mortgage brokers, but includes friends and relatives. So innocent people trying to help their friends could end up being criminalized by this legislation.
This complex bill can be read in its entirety at www.ilga.gov/legislation
Please take the time to call or fax your Senator about this bill today, and in the next few days place a call to your State Representative. Their information, phone number, and address can be found at www.ilga.gov – look under “legislator lookup”. You can put in your zip code and it will show your representatives’ information.
Please forward this information to any other investors you know. We need as many calls and faxes to hit the Senators and Representatives desks as possible in the next few days.