Boomer’s Blog

NBA star Shaquille O’Neal is shopping a reality TV show based on his plans to invest in Orlando’s burgeoning foreclosure market and “make small profits” by selling the homes back to distressed homeowners with more affordable terms. In some state however, “foreclosure rescue” operations have been scrutinized by lawmakers or banned outright.

The Orlando Sentinel reports that the NBA legend cum real estate investor wants to build his legacy by televising his efforts to help homeowners facing foreclosure in Orlando’s troubled real estate markets in a show to be called “Shaq’s Big Save.” O’Neal’s Attorney, Mark NeJame and Realtor Curtis Cooper arranged for the star center to meet with members of Orlando City Hall this week to float the plans, which may also include an affordable-housing project.

Lawmakers Tackle Foreclosure Rescue Regulation
Florida is not yet among the ranks of states seeking to regulate the activity of real estate investors who profit as foreclosure consultants to distressed homeowners. Last year, the National Conference of State Legislatures (NCSL) reported that a dozen states had taken steps to actively regulate foreclosure transactions. These states include California, Colorado, Georgia, Illinois, Indiana, Maryland, Minnesota, Missouri, Nevada, New Hampshire, New York and Rhode Island.

This year, lawmakers in Oregon and Washington have expanded their regulatory scopes by passing comprehensive laws that regulate lending practices and place restrictions on property transactions as well as contracts between real estate investors and the distressed sellers. Analysts have predicted that regulation trend is likely to accelerate as foreclosure rates continue to rise. This week, the Associated Press reports that foreclosures were up 23 percent in Q1, over Q4 2007.

Shaq Points, Shoots at REI Basket
O’Neal has been dabbling in real estate investment with the fortune he’s amassed through his NBA contracts and product endorsements for some time. In 2006, he created the O’Neal Group, which specializes in commercial and residential development, and housing the $50 million real estate portfolio the athlete has been building throughout his lucrative professional basketball career.

The majority of his development interests to-date have been in Atlanta and New Jersey. In Florida, O’Neal’s holdings include car washes, strip malls, a slice of metro Miami, and a luxury high rise residential tower currently under construction in downtown Miami.

Although O’Neil started his NBA career with the Orlando Magic, he currently plays for the Phoenix Suns. The Orlando Sentinel reports that the star NBA center with a penchant for investing in real estate plans to someday retire to his Florida estate and possibly run for Sheriff of Orange County.

An escalating trend of state legislatures regulating real estate investors who work as foreclosure consultants to help homeowners stave off foreclosure is taking many in our industry by storm.

Distressed Properties and Investors
In attempts to protect desperate homeowners, lawmakers have mandated consumer protections and fines for investors who violate the law. In many instances, these ongoing attempts to restrict real estate investors’ business practices are redefining the distressed property playing field .

With a growing number of real estate entrepreneurs using the Internet and other electronic resources to invest in markets outside of their home states, those who are using short sale, pre-foreclosure, and similar types of transaction strategies to invest in distressed properties should be vigilant in monitoring changes in state laws.

States Collecting Fines and Penalties
Last year, the National Conference of State Legislatures (NCSL) reported that a dozen states had taken steps to actively regulate foreclosure transactions. These states include California, Colorado, Georgia, Illinois, Indiana, Maryland, Minnesota, Missouri, Nevada, New Hampshire, New York and Rhode Island.

This year, more states have either considered or passed new laws geared to protect the interests of distressed homeowners and  penalize real estate investors who fail to comply with the law. These laws impose greater regulation on investors than some of the earlier legislation enacted in other states.

Lawmakers in Oregon and Washington have expanded their regulatory scopes by passing comprehensive laws that regulate lending practices and place restrictions on  property transaction as well as the contract between  investors (or real estate agents) and the sellers.

More Regulation Ahead
According to the National Association of Responsible Home Rebuilders and Investors (NARHRI), a Washington D.C.-based lobbying group for residential real estate investors, recent scrutiny of the industry by lawmakers and other policymakers is setting the stage for broader regulation in the future.

Because many states have assembled task forces to scrutinize business practices surrounding foreclosure and predatory lending, NARHRI predicts that ongoing legislative efforts will continue to target real estate investors by increasing restrictions on foreclosure consultants and their multifaceted business practices – especially with regards to equity-based and lease-back to owner transactions.

Look for ongoing coverage of this important trend here. Has increased regulation affected your business? Are you interested in seeing more posts like this one? Please drop us a line and tell us what you think.