As I've mentioned before, when Hawaii passed Act 137 last year with the intention of protecting consumers from Mortgage Fraud, they made one very drastic mistake in my opinion. THey disallowed realtor's from helping their clients and thus took away one of the consumers best resources. Well, our legislature got the word from the Hawaii Association of Realtors leadership and the results of those efforts have finally paid off.
Hawaii’s Governor Linda Lingle signed Senate Bill 34 into law. This amendment to Hawaii’s Mortgage Rescue Fraud Prevention Act (Act 137), provides an exemption for licensed real estate brokers and salespersons from being defined as “distressed property consultants” under Act 137. Most buyers and sellers were comletely unaware of this law or its consequences unless they attempted to buy or sell a property that was defined as a “Distressed Property”. A Distressed Property” is defined as any property where the owner/borrower was 2 months or more behind in payments to ANY lien holder. Originally, Act 137 prohibited Realtors from communicating directly with lien holders on behalf of their clients OR from coaching their clients on how to communicate and deliver information to their lien holders about the sale of their property!
People who had legitimate hardships, who could no longer pay their mortgages, were left completely ‘unrepresentable’ by Realtors under Act 137. For example (just one of MANY), we’ve represented clients who suffered debilitating illnesses which cost them their jobs and their ability to pay their mortgages… but once they were 2 months behind on their payments, we, their licensed agents and fiduciaries, were no longer allowed to speak with their creditors or even coach our clients on how to proceed with the sale of the property that they hired us to sell!
So, the end result was that people in Hawaii who needed the assistance of a Realtor the most were prevented from getting it.
This new law will be Act 66 of the 2009 Legislative Session, and is effective immediately. The bill also prohibits a licensed real estate broker or salesperson from acquiring an ownership interest in the distressed property, directly or indirectly, within 365 days after a listing agreement for the same distressed property has expired, or is terminated. You can read the letter from our Hawaii Association of Realtors to our Governor. Hawaii’s property owners who are faced with financial hardship, and perhaps foreclosure, will now be able to have the guidance and expertise of Realtors who in many cases understand the dynamics of short sales, foreclosures, and dealing with banks.
Did you have to deal with this type of legislation in your area?
Ron Margolis, RA, CDPE, ABR Hawaii Life Real Estate Services 808.346.7095 email: firstname.lastname@example.org