Legislature moves to give homeowners substantial protection from scam artists

Lantz bill puts 'distressed property consultants' on notice

March 6, 2008

OLYMPIA, WA – The Senate today overwhelmingly passed legislation to protect Washington homeowners facing foreclosure from scam artists preying on their vulnerabilities.  House Bill 2791 cleared the Senate by a vote of 39-6.  It passed the House unanimously last month.

The bill is sponsored by Rep. Pat Lantz (D – Gig Harbor), who also chairs the House Judiciary committee. 

‘Distressed property’ is a legal term for a property facing foreclosure proceedings.  Lantz’s bill targets so-called ‘distressed property consultants,’ who claim they can help a homeowner stop the foreclosure process.  Instead, the homeowner loses the home and any equity he or she has built up.

“These scam artists are the worst of the worst,” Lantz said.  “They prey on people in stressful times, and take advantage of their desperation.  There are legitimate organizations out there that do help homeowners, but this bill will put the scammers out of business.” 

A striker amendment by Sen. Brian Weinstein (D – Mercer Island) to the bill gives homeowners additional protections.  For example, the distressed property consultant would have a fiduciary duty to act in the homeowner’s best interest and in the utmost good faith.

“This means that if they say they are there to help you, then they better actually help you,” Lantz said.

The amendment also closes a loophole regarding the five-day right of cancellation provision in the original bill.  Previously, distressed homeowners could waive their right of cancellation if the home was subject to a foreclosure sale within five business days.  Distressed property consultants would take advantage of this, but now that right can no longer be waived.

“In the aftermath of the subprime mortgage crisis, this legislation will really make a difference,” Lantz said.  “The original bill was good, but the amendment gives people substantially more protection and makes Washington’s law one of the toughest in the nation against foreclosure rescue scams.”