Who's minding the store?

We're living in an era of lax oversight.

Don't believe me? Just pick up your newspaper or turn on the TV and you'll hear all about it. The excesses are well documented - from the $50 billion Ponzi scheme of New York financier Bernard Madoff to lavish spending by mega insurer American International Group, which received $150 billion in federal bailout money last fall.

While the oversight was poor and sometimes nonexistent in the financial markets, I find that poor oversight is deeply rooted in the real estate industry as well. The one issue that's come to my attention is the uneven application of how natural hazard disclosure statements figure into the mix. Specifically, are natural hazard disclosures (NHD) regulated by HUD? Are they a settlement service?

California, under Civil Code Section 1103.2 requires that an NHD is provided to a prospective buyer buyer of real property in a timely manner. Natural hazard disclosure statements identify whether a property is located within hazardous areas, including flood areas, zones prone to high fire hazards or seismic areas that could experience earthquakes.

Are escrow companies and officers not responsible for the NHD law compliance? Is NHD a settlement service under RESPA? And if it is, why isn't the Department of Housing and Urban Development (HUD) enforcing the disclosure requirements of the NHD?

I am finding conclusive evidence that NHDs are a settlement service under RESPA.

I'll be looking into this and other issues in upcoming blogs, so stay tuned!