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Lease options scrutinized at the state level
By John Grant  | | John Grant | |  The National Association of Responsible Home Rebuilders and Investors (NARHRI) expects that a measure will be introduced in Arizona to make the "82% Rule" for lease-option transactions the law. This would require an investor who is seeking to rescue a homeowner from foreclosure through a lease-back transaction to purchase the property for at least 82% of its market value. While lease options are a proven formula that allows people to remain in their homes and not suffer the ills of foreclosure, the practical reality is that the 82% Rule destroys profit margins for investors when they could buy the same property, post foreclosure, directly from the bank at a cheaper price. So, while lawmakers' good intentions are to save homeowners from fraud, their approach increases the likelihood for foreclosures to rise. This is where NARHRI's educational mission can make a strong impact. And much like the progress made with Colorado on an alternative measure that was passed last year with NARHRI's support, we can make sure that the interests of homeowners and ethical real estate investors are equally served. NARHRI has created a White Paper on this issue and will be distributing it both in Arizona and to state attorneys general at various events across the country this year. NARHRI has the support of AZREIA, which has advocates working at the state level. The organization is hopeful that, since it anticipated this action and began working proactively early on, it will achieve a resolution acceptable to all parties. Where progress seems even quicker is in the state of Nebraska, where legislation similar to Colorado's Foreclosure Protection Act is being considered. Sponsored by the Chairman of the Banking Committee, and with no mention of the 82% Rule, the fact that legislation is being considered is a good indicator that NARHRI's version is the lead bill. NARHRI will keep its members and supporters updated on activities in Arizona, Nebraska, and other states in which it is operating this year. By working with local REIA chapters and investors at the state level, and with the support of HomeVestors' franchisees, we can continue to shift the tide in favor of the industry. This recent legislative activity once again points to the need for a unified national legislative campaign. NARHRI's efforts in one state apply to actions in other states, and we need to be in as many states as possible to fight the efforts by some to arbitrarily ban certain real estate transactions. I would encourage all investors to join this effort. For those wishing to support this effort, please visit www.narhri.org and join NARHRI today. . . . John Grant is the executive director of NARHRI. Contact him at 202.607.7580
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