If you are a real estate agent in Washington State be very careful about taking on people selling foreclosures. A new law that goes into effect this week can open a can of worms if you do not do everything possible to protect the equity of a foreclosure seller.

These laws that sound great to lawmakers can have a chilling effect on a market. Now buyers agents will have to be very careful approaching sellers of distressed properties in Washington.

Which means trying to sell your foreclosure in Washington just got even more difficult. Another great example of how the law of unintended consequences is alive and well.

The law, called the “distressed property law,” went into effect Thursday and prohibits a practice known as equity skimming – a kind of fraud that masquerades as assisting a homeowner unable to make mortgage payments but instead takes what equity there is and leaves the homeowner in even worse financial shape.
Distressed homeowners, according to the legislation, are those in various stages of losing a home, from foreclosure to contemplating not making a mortgage or property tax payment. And a professional who discusses such a property with its owner could be considered “a distressed home consultant,” which includes real estate agents and brokers.
Not only must such a consultant act in the best interest of the homeowner – a potential conflict if an agent is representing a buyer – but the consultant also has a fiduciary duty that if not fulfilled carries a fine of up to $100,000.
To cover their bases, real estate companies have worked up additional paperwork for home sellers to determine whether they are distressed. Some are recommending that active listing agreements signed before Thursday be resigned. via TheNewsTribune.com

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