New Illinois Foreclosure Law PASSES
MORTGAGE RESCUE FRAUD
PREVENTION ACT
SENATE BILL 2349
Senator Collins – Rep. Colvin
The Issue
Home foreclosures are on the rise in Illinois, due in part to the explosive growth of predatory mortgage lending. According to the National Training and Information Center, mortgage foreclosure filings in Cook County jumped from 8,006 to 17,248 between 1996 and 2002. After dropping slightly in 2003 and 2004, filings were projected to hit a record high of 17,600 in 2005.
The self-styled “mortgage rescue” industry has grown in direct proportion to the number of homes that are at risk of foreclosure. Although mortgage rescuers promise to save the homes of financially distressed homeowners, they too often add insult to injury, either by charging exorbitant fees for services never rendered or by stripping the equity from the property and leaving the homeowners with nothing.
The Mortgage Rescue Fraud Prevention Act provides protections to homeowners such as:
Distressed Property Consultant Protections
• Distressed property consultants must provide homeowners with a written contract listing all services.
• The consultant contract must contain a right to cancel at any time.
• The consultant cannot receive any compensation until all services have been performed.
Distressed Property Purchaser Protections
• Distressed property purchasers must provide homeowners with a written contract that lists the terms of the
sale and makes it clear that the home is actually being sold.
• The homeowner has the right to cancel the sales contract for five business days after it is signed.
• Prior to sale, the purchaser must make a determination that the homeowner has the ability to make rental payments and to buy the home back.
• The purchaser must pay the homeowner at least 82% of the fair market value of the home.
• A homeowner who remains in the home under a rental agreement has the right to cancel the rental agreement
at any time.
• The purchaser must record the purchase contract with the county recorder of deeds, so that any subsequent purchaser is put on notice.
• A violation of this Act is a violation of the Consumer Fraud Act. Distressed property purchasers in violation of the Act are subject to criminal penalties as well.
Be careful out there.
Da Wiz
Does the 82% of FMV condition only apply to "rescue" deals or all foreclosure purchases? Thanks.
Sorry Wiz,
It sounds like you are misinforming the public again.
Even though it probably will pass, it has NOT happened yet.
Here is a link to where people can follow its progress:
http://www.ilga.gov/legislation/BillStatus.asp?DocNum=2349&GAID=8&DocTypeID=SB&LegId=23053&SessionID=50&GA=94
John (LV)
John (LV)
Thanks for keeping things straight... and Nice to say hello....
[addsig]
Thanks for clarifying John. Apparently it passed the house and the Senate is still considering it. Reading a couple sites it looks like the ridiculous 82% condition only applies if the owner pays a fee and stays in the home.
Thanks for the response. I received this today from an investor friend who is also a realtor in Utah. I just emailed him to thank him for the wonderful tip. . The bill was referred to the Rules Committee and no doubt will pass, just not today. Sorry.
Update: The vote will take place next week.[ Edited by mtnwizard on Date 03/04/2006 ]
John LV,
It is bills like this that harms the ligitimate investors out there who really helping folks in foreclosure.
I have found that many states are using this article (see link below) as a basis to pass these laws. So I recommend all TCI members read it and see who is responsible by making it difficult on the legitimate investors.
http://www.consumerlaw.org/news/ForeclosureReportFinal.pdf
John $Cash$ Locke
[addsig]
Sure glad I have my Brokers License...
[addsig]
Da wiz made a comment about the bad realtors lobbying to pass laws to put investors out of business.
Well we did have a huge activist meeting this year in VA. In fact, on Feb 15, 2006 several hundred Virginia Realtors went to the State Capitol to lobby.
For what you might ask....
To keep the Grantor taxes from tripling.
Jim
radio52,
Let me give you just one of many examples of how various states are looking at this law clerks views.
http://www.michigan.gov/ag
Now click on (Home Lending and Foreclosure Rescue Scams 1/2006) and tell me who the big dog burying the bone is.
Now once someone files a complaint with the Attorney General get you wallet out and be prepared to with stand a full investigation.
John $Cash$ Locke
[addsig]
Gary,
Breaking new for you, should the bill pass in North Carolina your will need a license to sell your trust method, if it does not violate this new law, which I believe it will.. Should the bill pass, I will then tell you how I know this for a fact.
I can give you a name of an excellent real estate school, which for a one time fee, then pass a test, you can practice real estate without breaking the law, since then you will hold a license to do so.
Since you were so kind to offer a free trust, I will pay for the real estate school you will need to attend to practice real estate in North Carolina.
John $Cash$ Locke
[addsig]
Gary,
Is your trust a legal document that is reconized by various states, title companies and lenders showing that it does not violate the DOSC?
John $Cash$ Locke
[addsig]
The Land Trust is a legal entity therefore it can assume a loan, create seller carry back financing, etc. the Land Trust takes title to the property, the Trustee signs as Trustee. In the case of the NARS trust, it is a legal document and each one is individually prepared by the legal staff. What is your point?
Quote:
On 2006-03-04 07:24, JohnLocke wrote:
in TN and LA land trusts are not recognized,
I feel left out! That Napoleonic law stuff again, but then we have "Bond for Deed".
Ichabod,
I will get to "Yes your honor" when Gary gets back."
$
[addsig]
I asked in another thread if NARS actually stood for
Not A Real Sale, Your Honor
Never got an answer, even though the title of the thread was Need Some Answers Please..
Larry
Gary,
You are correct Bill Gatten is a great leader; however he has not been board hustling or advertising on this board and other boards as you have. You personally have done great harm to him and his program by your answer to every question with a cut and paste out of the text book answers looking to hustle some poster into contacting you. You have no one to blame but yourself what is going on.
What is a legal document?
(law) a document that states some contractual relationship or grants some right
The NARS Land Trust falls under the terms of a legal document.
What is practicing law without a license?
The reason I know how your trust is presented and how it works is I have very close friend who has been with the NARS program since 1998, I could go into what is really involved, however the post would be several pages all by itself.
Almost all states use similar terminology as below.
Preparation or “review” of documents involving liberty, property, or other rights or interests; or any other service including, but not limited to, advice or negotiation, which in view of the facts and circumstances requires the knowledge, skill, and judgment of a person trained in law.
Additionally, whether an individual is paid for his or her services is irrelevant. The reasons for prohibiting the unauthorized practice of law are not to protect licensed attorneys from losing business to unlicensed individuals.
Rather, the purpose is to protect the public from consequences resulting “from the erroneous preparation of legal documents or the inaccurate legal advice given by persons untrained in the law”.
So no matter how you think that Federal law protects your trust, state law says what you can and can’t do when it comes to protecting the rights of their citizens. If any state wants to they can stop you cold from doing business, my point being it only takes one call to the Attorney Generals office by someone who feels they were cheated and then the investigation begins.
Another reason I never use trusts, besides hiding ownership and you never know when you step into someone’s house whether they are a true seller or someone from the states investigation division.
The paperwork I use is written for the laymen and is always state specific, as one size fits all does not necessarily work in all states. Should a seller have a question that falls into the realm of legal advice I advise them to check with a local attorney for their protection. Since my paperwork is state specific, even a local attorney would understand what is said and the costs for review would be minimal and I would even pay the cost.
A perfect example would be if you talk with a seller who is in the military they almost in ever case have their JAG (Judge Advocate General) office review the paperwork. I purchases over 50 properties from service people stationed at Nellis Air Force Base and my paperwork was reviewed many times. I received a call from a person stationed there who said they were being transferred immediately to Washington DC and needed out of their property quickly. I said no problem and I would come by and look at the property and as quickly as the JAG office could review the paperwork they could be on their way.
This person replied, I am the Commanding Officer of the JAG office and have seen your paperwork many times, so when can you see my house?
Now a NARS Land Trust agreement as written does not necessarily mean it is state specific in all states and there are maybe a handful of attorneys who would understand the NARS trust in the United States. So you can imagine the cost for having an attorney review it and run up the clock trying to understand what it meant. For someone who can’t pay next’s month mortgage payment, maybe $1,500 to $2,000 to have it reviewed.
The fines, penalties and prison time by using your trust (without extreme caution like one wrong word that could be construed as giving legal advice or considered “equity stripping” as stated in this article http://www.consumerlaw.org/news/ForeclosureReportFinal.pdf
) are not worth being indicted for Practicing Law Without A License or Fraudulent Business Practices.
So Gary Mialocq, Ph.D., you run on down to North Carolina should the bill HR 725 pass and even if it does not pass and tell the good ole boys down there how they can run their state.
John $Cash$ Locke
[addsig]
Gary,
One last thought if you want to RAT me out to the owner here with lies, like you did on anonther site, you can contact one of my students who does Subject To deals.
His name is Joel and he owns this site.
John $Cash$ Locke
[addsig]
I scanned through the new IL legislation. It has passed the IL Senate and is now at first reading in the IL House. It was passed unanimously in the IL Senate, BTW.
Excludes RE agents, attorneys, trustees, ...
It looks like it specifically excludes Subject To with the owner staying in the property or giving the owner the option to purchase it back.
"...
"Distressed property conveyance" means a transaction in which an owner of a distressed property transfers an interest in the distressed property; the acquirer of the property allows the owner of the distressed property to occupy the property;
and the acquirer of the property or a person acting in
participation with the acquirer of the property conveys or promises to convey an interest back to the owner or gives the owner an option to purchase the property at a later date.
..."
Another interesting fact is that it covers residential buildings up to an including 6 units. Whereas, the Garn St. Germain Act covers residential buildings up to and including 4 units.
Plenty of notices and mandates on the font size ...
Section 50 (a) (6)
Prohibits a "distressed property consultant" to take any power of attorney, except to inspect documents as provided by law. I wonder if a POA for payoffs would be covered under "as provided by law".
Debt-to-income ratios, appraisals, ... oh my!
I see having to do Non-disclosures of the trust beneficiaries and terms of the agreement.
What a mess. Have to rethink the whole process again.
Anyone in IL that would like to share in the effort?
What were we talking about?
Quote:
On 2006-03-03 12:53, mtnwizard wrote:
MORTGAGE RESCUE FRAUD
PREVENTION ACT
SENATE BILL 2349
Senator Collins – Rep. Colvin
The Issue
Home foreclosures are on the rise in Illinois, due in part to the explosive growth of predatory mortgage lending. According to the National Training and Information Center, mortgage foreclosure filings in Cook County jumped from 8,006 to 17,248 between 1996 and 2002. After dropping slightly in 2003 and 2004, filings were projected to hit a record high of 17,600 in 2005.
The self-styled “mortgage rescue” industry has grown in direct proportion to the number of homes that are at risk of foreclosure. Although mortgage rescuers promise to save the homes of financially distressed homeowners, they too often add insult to injury, either by charging exorbitant fees for services never rendered or by stripping the equity from the property and leaving the homeowners with nothing.
The Mortgage Rescue Fraud Prevention Act provides protections to homeowners such as:
Distressed Property Consultant Protections
• Distressed property consultants must provide homeowners with a written contract listing all services.
• The consultant contract must contain a right to cancel at any time.
• The consultant cannot receive any compensation until all services have been performed.
Distressed Property Purchaser Protections
• Distressed property purchasers must provide homeowners with a written contract that lists the terms of the
sale and makes it clear that the home is actually being sold.
• The homeowner has the right to cancel the sales contract for five business days after it is signed.
• Prior to sale, the purchaser must make a determination that the homeowner has the ability to make rental payments and to buy the home back.
• The purchaser must pay the homeowner at least 82% of the fair market value of the home.
• A homeowner who remains in the home under a rental agreement has the right to cancel the rental agreement
at any time.
• The purchaser must record the purchase contract with the county recorder of deeds, so that any subsequent purchaser is put on notice.
• A violation of this Act is a violation of the Consumer Fraud Act. Distressed property purchasers in violation of the Act are subject to criminal penalties as well.
Be careful out there.
Da Wiz
Mtnwizard, I want to know how states are getting around the Supreme courts ruling regarding eminant domain, since you claimed states cant supercede the federal government. It looks like they are to me.
Gary:
If you become a 90% land trust beneficiar and the seller remains at 10% what happens when you decide to sell? Does the owner get 10%? Or do you have an extra agreement (OK, I will call it back pocket agreement) that he has already sold you that 10% for "valuebale goods and services"?
BTW, In Illinois (Cook County), Chicago Title & Trust is asking me to enter the names of all trust beneficiaries and then this form is recoreded with the Recorder of Deeds. Which kind of defeats the privacy benefit of having a land trust in the first place.
lyubomira2
When the tenant/buyer buys out the trust by refinancing, the mortgage is paid off and the seller receives all his agreed upon equity. Upon receipt, he grants his 10% to you.
I"ve never heard of that or ever encountered such a problem as the one that you described at Chicago Title.
I personally do not sell back to the owners. I will rent back to them only. And when I "purchase" the property we go to a real estate attorney to handle the closing so that there can be no misunderstanding that they are titling the house over to me. The technique of selling back to the original sellers is getting a very bad rap right now. It is called equity stripping. You can always take your chances.
By the way, how has Realquest been working out?
Investorgal,
How does the billing work with realquest for you? I tried them and got an outrageous bill for $200 for accessing 2-3 reports. Is it a per report charge?
I am on the program where I have unlimited access/downloads and pay per "county". Right now I have 3 counties + foreclosure info. for one of the counties and pay $385.00 per month. Expensive, but it has paid for itself ten-fold.
Maybe these links will help.
http://www.thecreativeinvestor.com/residential/ViewTopic53586-18.html
http://www.thecreativeinvestor.com/residential/ViewTopic53621-18.html
If you are not sure where to find your most recent posts, click on the My TCI tab at the top of the page. This will take you to a screen that will have hot links to your most recent postings.,