Our New Responsible Mortgage Lending law

Just when you thought you had seen the most stupid law from our legislature regarding real estate omitting common sense, here comes another! House Bill 2770 aims to make what was a federal offense a state class-B felony. While it is aimed at mortgage brokers, it has wide sweeping implications to real estate agents, buyers, sellers, home inspectors, contractors, and just about anyone else who has even a limited financial interest in a real estate transaction involving a mortgage.

cross my fingersThis law provides that a residential mortgage loan may not be made unless a disclosure summary of all material terms is placed on a separate sheet of paper and has been provided by a financial institution to the borrower and that a financial institution may not make or facilitate the origination of a residential mortgage loan that includes a prepayment penalty or that imposes negative amortization under certain circumstances. And here’s the catch-all clincher: The law says that certain acts and omissions by any person in connection with making, brokering, or obtaining a residential mortgage loan are unlawful.

While part of the law attacks important issues like negative amortization and pre-payment penalties, it’s the broad definition regarding the disclosure of material facts relating to a property that causes me the greatest concern.

Example: Buyer purchases a home “subject to inspection

Filling in the Rain City Guide Vision…

[photopress:conversation.JPG,thumb,alignright]Part of the vision that I have for Rain City Guide is to add more contributors who can bring different areas of expertise in order to broaden our discussion. Along these lines, I want to extend a warm welcome to Craig Blackmon. Craig is a local real estate lawyer and I hope that he will continue to write more articles like the one he posted yesterday on The Financing Contingency.

Most real estate agents are not trained in the minutiae of real estate law… and there are times when the best response an agent can give to a client is: “you should talk with a lawyer.” I’m glad that Craig has decided to post some articles on Rain City Guide, and I’m sure that I’ll turn to him with questions in the future!

For those wanting a little more background on Craig, I’ve grabbed his bio off of his website (Law Office of Craig Blackmon):

I’ve been practicing law since 1999, when I graduated from the University of Washington. Prior to that, I worked as a public high school teacher, one year in NYC followed by three years in Chicago. I realized that, although teaching is very rewarding, it is extremely difficult being responsible for 150 kids in one hour increments of 30 each. So I followed my father’s career path and enrolled in law school. After graduation, I worked for five years litigating claims of negligence, usually defending health care providers against claims of malpractice. I tired of the stress and long hours, so I took a job as in-house legal counsel for Group Health Cooperative, a large, consumer-owned health care provider here in Washington. After several months, I realized I missed the human interaction that is so integral to both teaching and the private practice of law. At about the same time, my wife and I sold our house, and in the process I realized the importance of good legal counsel during the transaction. Shortly thereafter, in June of 2005, I left Group Health and launched the Law Office of Craig Blackmon.

While I’m a huge fan of people using real estate agents (surprise, surprise…), a quick glance at Craig’s website also reveals that he has reasonable fees for people looking at selling or buying their home via For Sale By Owner (FSBO). If you do decide to go sans agent (and you live in the Seattle area!), then it seems that the $500 or so that he charges could drastically simplify the process AND bring you some piece of mind! (a good night’s sleep should not be underestimated!).

By the way, you can also read some more from Craig on a new blog that he has started to fill in: http://residentialrealestate.blogspot.com/.