Need to know when buying a new home that is built in Maryland

by Dan Krell © 2012

New HomesIn today’s housing market, chances are that you may looking to buy a new home rather than a resale;

be prepared and know what you can reasonably expect from the home builder, as well as understanding how to resolve problems with the builder.  Whether or not you have a licensed real estate agent representing you in the transaction; the Maryland Office of the Attorney General Consumer Protection Division provides consumers guidance, pertinent information and other resources to dealing with a home builder and buying a new home built in Maryland.

Unfortunately, many home buyers believe they do not need representation when buying a new home.  Because the new home builder reps are often friendly, helpful and may appear to be on your side in the transaction; it is understandable how a home buyer may misconstrue the home builder’s sales persons’ loyalties.  However, home buyers must recognize that the builder’s sales people represent the home builder.

Before engaging a home builder and their sales people, you should check out whether or not the home builder is registered with the Home Builder Registration Unit.  Additionally, unless the home builder hires a licensed real estate agent to represent them, the home builder’s sales reps must also be registered with the Home Builder Registration Unit.

Before entering into a contract with a home builder,

you might consider reading the consumer information booklet that home builders are required to provide consumers before entering into a new home sales contract.  The booklet is provided by the Home Builder Registration Unit of the Maryland OAG Consumer Protection Division and discusses: choosing a builder, the contract, how your deposit is protected, custom home contracts, construction of your home, and resolving problems.

The Maryland OAG Consumer Protection Division oversees a Home Builder Guaranty Fund “that allows consumers to seek compensation for losses resulting from an act or omission by a registered builder who constructs a new home for a consumer.”  You may seek compensation from the guaranty fund if your home builder is registered with the Home Builder Registration Unit and you entered into a contract for a new home built in Maryland after January 1, 2009.

New HomesPayments from the Home Builder Guaranty Fund are to cover actual loss that result from “an act or omission by a registered builder as determined by the Consumer Protection Division or a court of competent jurisdiction…”  The Guaranty Fund is not meant to cover such items as: attorney fees, punitive damages, interest, court costs, personal injury, or subsequent damages.  The “actual loss” that is covered refers to “the costs of restoration, repair, replacement or completion that results from the incomplete construction of a new home, a breach of an express or implied warranty, or a failure of the builder to meet certain construction standards or guidelines.”

Guaranty Fund claims must be made “within 2 years after the consumer discovered or should have discovered the loss or damage or within 2 years after the new home warranty expires, whichever comes first. If the consumer files a claim against the home warranty plan, he or she must file the claim against the Guaranty Fund within 4 months after that claims process is exhausted.”

For further information on the Home Builder Registration Unit, consumer information booklet, and the Home Builder Guaranty Fund – visit the Maryland OAG Consumer Protection Division website on home builders (

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This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of September 17, 2012. Using this article without permission is a violation of copyright laws. Copyright © 2012 Dan Krell.

How to dispute credit report errors

by Dan Krell © 2010

Recently I told you about the growing importance of your credit report and why you need to ensure it’s accurate. The accuracy of your credit report is more important today than it ever was, not just because mortgage lenders have tightened credit qualifying guidelines, but also because of the growing reliance on credit reports from employers, insurers and other creditors to get information about you.

It is not unusual to find discrepancies or incomplete information within the report, including old credit accounts and outdated personal history. Errors in personal information and credit history sometimes occur due to transposed social security numbers and confusing people with similar names (including confusing the Jr and Sr name suffix). The Fair Credit Reporting Act ( requires accurate and complete data about to be reported by credit reporting companies and those providing information about you.

The first step in correcting errors is to review your report. As I have previously described, you have the opportunity to receive a free credit report from each of the three credit repositories (other factors may allow you to receive additional free reports). Additionally, since fraud and identity theft is a serious threat to your credit history and a growing concern among law enforcement; a regular review of your credit report is a good idea even if you have previously deemed the information accurate. You can contact each of the three credit repositories directly Equifax (, Experian (, and Trans Union (, or you can visit (a central credit service created by the three credit repositories). The Office of the Maryland Attorney General cautions people when entering website addresses; when entering website addresses, accuracy is important because of the many similar commercial websites that charge for similar services.

If you determine that errors exist in your report, you must notify the credit reporting company in writing to dispute the information. To document your letter delivery, the Federal Trade Commission suggests that your letter be sent via certified mail with return receipt requested. Besides showing your complete name and address, your dispute letter should clearly identify all disputed items with an explanation of the facts as to why the information is disputed along with a request to remove the information. Additionally, your dispute letter should contain the report with disputed items circled, as well as any copy of supporting material to defend your claim.

The credit reporting company has thirty days to investigate the disputed items. The credit reporting company will forward your dispute, along with any supporting materials, to the provider of the disputed information to initiate an investigation of their own. If the disputed information is found to be inaccurate, then the provider must report the corrected accurate data to all three credit repositories. The credit reporting company must provide you notice of the outcome of the investigation along with an updated report showing any changes.

Sometimes credit reporting companies will determine a dispute is “frivolous” (often when insufficient information is provided) and will terminate an investigation. If your dispute was determined to be “frivolous,” the credit reporting company must notify you along with the reasons for this determination.

Additional and updated credit report dispute resolution information as well as resources are offered by the Federal Trade Commission (, and the Office of the Maryland Attorney General (

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of January 11, 2010. Using this this article without permission is a violation of copyright laws. Copyright © 2010 Dan Krell

House Flipping makes a comeback

by Dan Krell © 2009

Short sales? Foreclosures? Fugetaboutit! House flipping is the new real estate buzz!

Flipping homes is an investor technique used to quickly sell a home, sometimes rehabilitating the home to current code and standards. Flipping is more prevalent in re-emerging markets (sometimes associated with recessions) because of the real estate investors’ ability to buy homes at wholesale and sell at retail prices. Flipping was also pervasive during the housing boom earlier this decade, when real estate speculators took advantage of the rapidly appreciating market by quickly re-selling homes they purchased almost as soon as they bought them.

Home flipping has been a viable technique included in many real estate investors’ business models. Flipping is not only a means for investors to make money, it has often been a part of neighborhood revitalization. Run down homes, that are often overlooked by home buyers, are made more appealing by modernizing and renovating to code.

Unfortunately, flipping has become synonymous with fraud and scam because of the vilification home flipping received in the mid to late 1990’s (as the result of widespread fraud scams that involved flipped homes). Several cities were known as “ground zero” for flipping scams, Baltimore being one, because of the investors’ ability to purchase homes for very little money.

Although, there is nothing wrong with flipping a home per se; flipping has been rebuked because mortgage fraud was often entwined with the flip in several ways: loan officers falsified income and/or credit information for unqualified home buyers; fraudulent appraisals were used to justify artificially inflated sales prices; and/or “straw buyers” were recruited by the scammers to facilitate the scam. Additionally, flipping scammers often defrauded unknowing home buyers by portraying homes as having renovations, when in fact the renovations were not preformed or of poor quality and not meeting code.

To protect consumers and stem the mounting losses due to illegal flipping, HUD took action. HUD defines “flipping” as, “… a practice whereby a recently acquired property is resold for a considerable profit with an artificially inflated value, often abetted by a lender’s collusion with the appraiser…” (HUD MORTGAGEE LETTER 2003-07). To dissuade the financing of flips, FHA instituted a title seasoning (the time an owner is on title) requirement of at least 90 days; if the sale is between 91 and 180 days, the sales price cannot exceed 100% of the prior sales price.

In the wake of the illegal flipping scams that rocked many Baltimore neighborhoods, then Maryland Attorney General J. Joseph Curran, Jr. launched an initiative to combat deceptive real estate practices that included flipping and predatory lending. The initiative not only sought to prosecute scammers, but to educate home buyers through town hall meetings and a brochure.

The brochure ( gives five signs that the sales price of the home may not be the value and that sale is a [illegal] flip, including: the seller does not answer questions about price or condition; and, the person “selling” the home is not on title or the home was recently sold.

Since flipping is on the rise, protect yourself by getting all the information. Find out if the seller is being deceptive, as well as how the flip may affect your ability to obtain a mortgage.

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of December 14, 2009. Copyright © 2009 Dan Krell

Foreclosure Assistance

by Dan Krell

It is common to experience financial problems at any given time in one’s life. There are many reasons people experience financial problems. If it isn’t being surprised by loss of employment, illness, or divorce it may be due to lack of financial planning. Whatever the reason, experiencing a financial crisis, including foreclosure, is an unsettling process for anyone.

A site that is becoming more frequent in any neighborhood is the home going through the foreclosure process. The owner may still be in the home or they may have vacated months earlier leaving an empty shell to deteriorate in the ensuing months.

At first, you may not notice anything different in the home, but as time progresses it hard to not notice. You may notice your neighbor withdrawing and evading anyone coming to the door. The house numbers may disappear in an attempt to confuse those trying to identify the home. The lawn may be neglected and become overgrown with grass and weeds. The home itself may noticeably fall in disrepair as well.

Many people facing foreclosure tend to be in denial and believe that nothing is wrong and go about their lives thinking that they will not lose their home. Denial is a common defense mechanism that serves to lessen the severity of emotional pain that one may endure. However, it is not useful when facing foreclosure. Denial is a slippery slope such that people may not confront the challenges they face, and in this case-lose their home.

If you are falling behind in your mortgage, you may want to consult a bankruptcy attorney. As foreclosure is a manifestation of a larger financial problem, reorganizing your debts may help save your home.

If you find that you can no longer afford your mortgage, selling your home may be an option; however, as home prices have dropped you will have to determine if this is practical. If you can prove that your home has lost value, a common tactic is to ask the lender for a short sale, which is essentially asking them to take less than what is owed.

If you do not pay your mortgage, the mortgage company will be trying to contact you; it is important to communicate with the mortgage company so as to determine if they can assist through such measures as forbearance. You may be able to renegotiate the terms of your loan, or even have your late payments forgiven in an attempt to remedy the situation.

If you continue to not pay, you will receive a notice of default through certified mail. After receiving the notice, you may have an opportunity to reinstate your loan by paying the past due amount including late fees.

At this point, if you do not take action, the mortgage company will initiate the foreclosure process. Once the foreclosure process starts, your options are limited; the time from the initiation of the process to the foreclosure sale can be quite fast.

The foreclosure process is not pleasant, and can impact those involved with long lasting financial and psychological scars. If you know that you may be facing a foreclosure, it is important to be proactive. If you need assistance, the Maryland Attorney General offers information to those in foreclosure on the web at:

This column is not intended to provide nor should it be relied upon for legal and financial advice.This article was originally published in the Montgomery County Sentinel the week of April 2, 2007. Copyright (c) 2007 Dan Krell.