Friday, May 11, 2007

NY Home Equity Theft Law Hurting Sellers

I had written earlier about the NY Home Equity Theft Act and its possible effect on my business. The main problem seems to be hesitation of Title Insurance companies to write policies. The main intent of the law was to protect the homeowners from having their equity "stolen" by unscrupulous investors. However, after dealing with this for nearly 4 months the law of unintended consequences is hard at work.

What I have found is that Realtors are not generally aware of this law and properties for sale where the homeowner is going through foreclosure are difficult to sell. There are specific requirements for contracts that the NY Realtors contract does not have incorporated yet. Things like font size, Notices about the law and Right to Cancel are missing. Consequently, any buyer purchasing a property in foreclosure is setting themselves up for $25K fines and potential for jail time. So who is going to buy such a property? Only a sophisticated buyer with a good lawyer.

In the end this law has stopped the homeowners ability to sell once they receive the lis pendens notice and given investors the upper hand. It hurts those it intended to help. Our politicians seem to have an uncanny ability to do more harm than good.

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