He may not be much of a lawyer, but Attorney General Rob McKenna has a well-earned reputation as one of our state’s most talented politicians… if by “talented politician” you mean a shameless suck up. Rob’s just a guy who can’t say “no” to potential constituencies… you know, the kinda guy who might actually thank you for suing his client, as long as such blatantly inappropriate brown-nosing served his long term political aspirations.
Our AG’s unrivaled talent at political bootlicking was on display once again in a recent article in the Seattle Weekly, in which McKenna—a self-proclaimed crusader against consumer fraud—bizarrely comes out on the wrong side of mortgage foreclosure rescue scams in a seemingly unselfconscious effort to curry favor with the well-heeled Washington Association of Realtors.
McKenna has been less enthusiastic about that foreclosure measure as the state’s realtors have stepped up their criticism of it. The Washington Association of Realtors recently posted a video on its Web site decrying the measure and talking about plans to get it changed. The video features McKenna. In it, he says the foreclosure bill that passed “was far different than what I originally proposed. The state Senate added in a lot of language that we never intended and that we actively opposed with our friends in the realtor community.”
Oh really? Here’s a clip from the Realtor’s video, so you can see McKenna making the case in his own words:
So McKenna and his “friends in the realtor community” actively opposed the Senate amendment, but those sneaky Democrats still managed to ruin his bill? Through a spokesperson McKenna goes on to claim:
But Kristin Alexander, spokesperson for the AG’s office, claims the amendments were dropped into the bill only hours before the legislature passed it. “We had literally moments in which to review the legislation,” she says. She points to the bill’s history as proof: In February and March, the bill morphed through several drafts before the House and Senate agreed on a final version—only a day before it was delivered to Gregoire.
“The [consultant] language was in, and then it was passed and we never had time to react,” Riley says. “If we had known it was in there, we would have pitched a fit, we would have gone to huge lengths to eliminate it. But we didn’t know.”
In fact, as the Weekly fails to point out to its readers, the bill’s history actually proves the opposite: the amendment received a public hearing before the Senate Consumer Protection & Housing Committee on February 29, six days before its initial passage in the Senate, and a full twelve days before its unanimous passage in the House. As anybody who knows the workings of Olympia will tell you, that’s an eternity during a legislative session; indeed, far from having no time to react, the Senate bill report clearly shows that Jim Sugarman of the AG’s office not only didn’t utter a word in opposition to the amendment, he testified in favor of the bill, and that nobody from the “realtor community” opposed the bill on the grounds that are now at the heart of the dispute.
So what is it about this bill that has McKenna and the realtor’s undies in a knot? The “distressed property” bill was intended to address an increasingly common scam, in which homeowners facing imminent foreclosure are convinced to sell their houses for nothing, in exchange for a fraudulent promise to let them stay in their homes, and eventually buy the title back. As McKenna suggests, the original House bill, as introduced by Rep. Pat Lantz, was narrowly focused, only sanctioning those parties who fraudulently receive title of these distressed properties. But in reality, many of these scams are facilitated by shady realtors who do not receive title themselves, but are compensated by the crooks who do.
The provision to which McKenna and the realtors now suddenly object—a provision that Rep. Lantz testified made her bill “even better,” and that passed both the House and the Senate by near unanimous margins—merely extends liability to licensed realtors, mandating that they have a fiduciary responsibility to represent the interests of the homeowners, while providing full disclosure of the terms of the agreement. Seems pretty commonsense to me, kinda like requiring ice cream vendors to sell you, you know… ice cream. So the problem is…?
Realtors now claim that this measure would open them up to frivolous lawsuits, a complaint that A) is facially ridiculous; and B) was never raised while the measure was being considered.
As for A), anybody could sue anybody for anything; for example, McKenna could sue me for libelously implying that he’s in cahoots with foreclosure rescue scammers. He wouldn’t win, but he could sue me, and he could cost me an awful lot of time and a pretty penny in the process. But that hasn’t stopped the realtors from playing victim here:
Riley wants to get realtors exempted from the fiduciary duty, as mortgage brokers and nonprofit counseling agencies are, under the law. He says realtors are vulnerable in that if a buyer gets a very good deal on a home, and if later the seller decides the deal was too good, the seller could sue. “What’s happened as a result is that some of our members have elected not to help these people, and let the homes go to foreclosure, because they think it’s safer to do that because of the increased liability,” says Riley.
Such a scenario is not implausible, says Melissa Huelsman, a Seattle-based consumer-advocacy attorney who was involved in crafting the law. However, “they’re, in my opinion, stretching it in a way that no rational judge would ever view it. This law in no way, shape, or form was directed at those kinds of transactions.” No one contacted for this story had heard of a lawsuit yet being filed under the law.
[State Sen. Brian] Weinstein agrees. He says the new law would only impose liability on a realtor who did not put the homeowner’s best interest first, or who failed to comply with the disclosures required in the bill, causing economic harm to the homeowner as a result of the transaction.
I’ve spoken with both Huelsman and Weinstein, and neither would object to inserting language specifying that this provision is not meant to extend liability to such frivolous circumstances… but then, neither think it necessary. And both assure me that this concern had never been raised during the lengthy discussions between realtors, consumer advocates, the AG’s office and legislators during the months that led up to final passage.
In fact, contrary to McKenna’s claim that he “actively opposed” this measure at the time, Huelsman tells me that she never heard a single objection on such grounds until two months after the bill’s final passage.
So what accounts for McKenna’s sudden change of heart (and history)? If he really believes there’s a liability issue here, his office certainly didn’t catch it at the time, so perhaps he’s just trying to cover for his own screw up? Or maybe he once again got caught up in the moment, telling the realtors what they wanted hear, the record be damned, as he often does when speaking to special interest groups?
But whatever his motives the tactics seem clear: a calculated effort to strong arm the legislature into striking a necessary and reasonable consumer protection provision… an effort that ultimately benefits nobody but the handful of crooked real estate agents who are cruelly scamming WA families out of their homes. And an effort on whose behalf he’s even willing to allow himself to be caught in a lie.
Somehow, you’d think we might expect more from an AG who has made fighting consumer fraud a centerpiece of his reelection campaign.
The fucking cowards at the Washington Association of Realtors had YouTube pull my clip, which was without a doubt fair use. (Why do they hate America?) No bother, I’ll just post it again using another a service.