Banking Law

Stamping Out Equity Stripping In Texas

If we can bash Texas Attorney General Greg Abbott when he grandstands publicly to no practical purpose other than advancing his political career, we can give him his "props" when he grandstands to advance his political career and incidentally screws people who desperately deserve it.

Texas Attorney General Greg Abbott is encouraging the passage of the proposed Foreclosure Rescue Fraud Prevention Act, which would require companies and specialists working as foreclosure prevention consultants to obtain certain permissions and provide quality information before taking on loss mitigation cases.

Abbott, who is proposing the bill alongside State Sen. Craig Estes, R-Wichita Falls, says the measure is needed to crackdown on foreclosure schemes in which businesses prey on troubled homeowners by promising a rescue plan that instead ends up stripping homeowners of equity and causing them to lose their properties.

[...]

If passed, the state could require that foreclosure prevention specialists offer clients an agreement that is clearly written and includes disclosures advising homeowners to communicate with an attorney before entering a loss-mitigation agreement with a business or an individual. The new regulations would apply to agreements tied to equity purchases or documents related to foreclosure prevention services.

The proposed act also would protect a majority of a homeowner?s equity by requiring equity purchase agreement buyers to put down at least 82 percent of the property?s market value, Abbott?s office said.

Desperate people are often subject to being taken advantage of by jackals like equity strippers. Therfore, anything that curbs such abuse is welcome. I'll have to parse the legislation once it's introduced to make certain that it provides for the summary execution of offenders, after a fair trial, of course. Not as a matter of revenge, but of deterence. As English statesman George Savile once observed, "Men are not hanged for stealing horses, but that horses may not be stolen."

Full post as published by Bank Lawyers Blog on December 11, 2008 (boomark / email).