Robyn Seymour - Differences between a Consultant and a Purchaser in Foreclosure Consulting

The only possible option for most homeowners who come across the problem of foreclosure may decide to sell their homes to a real estate investor. Unfortunately, investors have not always been above board in their dealings with homeowners, and several property holders have found themselves holding empty promises and bad debts while the investor walks away with the property. With all the recent foreclosure activity throughout the nation, several states have enacted laws to protect the homeowner from making an uninformed decision about their home. In the last two years, over twelve states have created strict laws that purchasers must adhere to, and have created the role of Foreclosure Consultant to provide information and assist the property holder in making an educated choice about their home.

In the states that have strict laws against an Investor contacting you directly to purchase your home, you will need to work with a middleman to sell your home to an Investor. The role of the middleman is to clearly explain your options and rights when you are facing foreclosure. A lawyer, real estate agent or broker, or Foreclosure Consultant are some examples of legally-defined “middlemen”, and can assist you with your property sale. These professions are performing a service for a fee, and do not have an equitable interest in the sale of your home. To explain this clearly, you should understand the differences between a Foreclosure Consultant and a Foreclosure Purchaser (an Investor).

A Foreclosure Consultant is a person who makes a solicitation, representation, or offer to a homeowner at risk of foreclosure to perform, or who performs, one of a number of specified services that the person represents will help the homeowner.

A Foreclosure Consultant CANNOT: Buy a pre-foreclosure property, Have an equitable interest in the sale of the property, Induce the homeowner to sign documentation that waives their rights regarding the transfer of ownership of their property and Have “agency” with one investor/investment firm.

A Foreclosure Purchaser (Investor) is a person who acquires title or possession of a deed or other document to a residence in foreclosure. ** A Foreclosure Purchaser CANNOT: Market directly to homeowners in pre-foreclosure, Have initial contact homeowners to discuss options, Negotiate directly with mortgage companies and law firms on behalf of the property owner and induce the homeowner to sign documentation that waives their rights regarding the transfer of ownership of their property.

Definition from MD Bill SB761:

A Foreclosure Consultant and a Foreclosure Purchaser are two separate entities. One person cannot be both. If a person represents him/herself as a Foreclosure Consultant and offers to purchase your home, they may not be working in the utmost integrity. If you are selling the house yourself to avoid foreclosure, check to see if there are any complaints against the prospective buyer. You can contact your state's Attorney General, the State Real Estate Commission, or the local District Attorney's Consumer Fraud Unit for this type of information.

Here are the states (as of the date of publication) that have been enacted to protect homeowners from foreclosure scams: Michigan, Minnesota, Maryland, Illinois, Colorado, California, Georgia, Missouri, New York, Rhode Island, Washington, and Florida. Other states (such as the District of Columbia) have introduced bills similar to the ones above. You have to call and discuss with your legislator if your state has not yet considered a bill such as these.