Practically everyone. Let’s examine things:

The term “Distressed Home Consultant” went into effect in Washington State on June 12, 2008. It is part of the new “Distressed Properties Law” created during the 2008 Washington State Legislative Session and signed into law by Governor Christine Gregoire on March 30, 2008.

The purpose of the law was to protect vulnerable homeowners from being targeted by ‘equity-skimmers’ and ‘lease-option’ investors. For example, a homeowner with a substantial amount of equity, who faced difficulties in making their mortgage payments would be approached by an investor who would offer to make their mortgage payments in exchange for the deed to their house.

After a period of time, say 12 to 24 months, the homeowner would have the option of buying back their house. In reality, the homeowner would have little chance at either staying current on the rent, and face eviction or come to the end of the rental period and be in no situation to qualify for a loan and buy the house back. Either way, the investor ends up with the house and a lot of equity.

If the law focused narrowly on that issue, it would have been helpful. Unfortunately, the way it was drafted makes it even harder now for homeowners in distress to find help. Clearly a case of overreach by lawmakers who don’t fully understand the situation.

At the heart of the law is the idea of all parties to a transaction with a distressed homeowner needing to exercise ‘fiduciary responsibility’ towards the homeowner. Imagine a homeowner who has decided to sell their home. The buyer, and the buyer’s agent, under the provisions of this law, are now classified as Distressed Home Consultants. Buyer’s do not typically have to take into consideration the financial situation of the seller. They are simply making a purchase decision for their own account. This law may have the effect of scaring away buyers, when a buyer is exactly what the homeowner needs at that moment.

In addition, any real estate agent who engages with a homeowner who is in financial distress will automatically be labeled a Distressed Home Consultant.  Many agents will not want to expose themselves to the  liability  and choose to not represent these homeowners in need. Again, this law, while having good intentions, suffers from overreach, and serves to reduce the amount of qualified help for homeowners.