Florida Law on Foreclosure Relief Scams

Through the combined efforts of the Attorney General and the state legislature, Florida was one of the first states to aggressively combat mortgage and foreclosure relief fraud. In 2008, with more than 245,000 mortgage foreclosures, Florida ranked second in the nation. Mortgage fraud cases increased proportionately.

Laws for Foreclosure Relief in FL

In 2007, Attorney General Bill McCollum launched a “Mortgage Fraud Task Force,” and gathered state agency administrators, state and county law enforcement and prosecutorial officers, and Florida State Bar representatives to address the state’s mortgage and foreclosure relief fraud issues. Among other things, the collective effort produced streamlined complaint intake system – currently managed by the Office of the Attorney General through www.myfloridalegal.com and 1-866-9-NO-SCAM.

Florida's Foreclosure Rescue Prevention Act

The Attorney General also shared responsibility for the introduction and passage of the state’s Foreclosure Rescue Fraud Prevention Act of 2008. Under this law, a “foreclosure rescue consultant” is any person or entity who directly or indirectly makes a solicitation, representation or offer to a homeowner for the performance of “foreclosure-related rescue services” in return for money or other consideration. “Foreclosure-related rescue services” means any good or service related to, or promising assistance with, stopping, delaying or avoiding foreclosure proceedings on residential real property or curing a default or failure to timely make payments on a residential mortgage loan. Attorneys and real estate agents are subject to the law, and most if not all had to change their means of doing business and obtaining payment, particularly with respect to “short sales.”

The law includes the following provisions:

• foreclosure rescue consultants must provide a written agreement, and obtain the consumer’s signature before performing services. The written agreement must notify the homeowner of the right to cancel and the procedure for cancellation, and it must advise the consumer the s/he should contact the lender before signing to see if the lender is willing to negotiate relief free of charge
• the consultant cannot charge any fees until all services listed in the contract have been completed.
  
• there must be a cooling-off period for the homeowner to cancel the contract or a transfer of their home
  
• all transfers to a consultant involving a lease-back or sell-back provision create a rebuttable presumption that the transaction is a loan transaction and the conveyance is a mortgage to the equity purchaser from the homeowner.

Laws on Selling or Transferring Foreclosing Homes in Florida

Additionally, before any instrument that transfers title to a subject property can be executed, the buyer/investor must execute a separate contract with all of the terms and conditions of the proposed property transfer. If the transaction takes place and the homeowner is remaining in the home and making payments to the new owner, the homeowner has a 30-day right to cure any default of the terms of the repurchase agreement. The repurchase price cannot exceed a certain threshold.

As a result of the Act and the efforts of the Task Force, between October 2008 and November 2009, the Attorney General’s Economic Crimes Division has shut down businesses, filed 17 civil lawsuits for mortgage fraud or foreclosure relief violations and recovered $1.5 million for victimized Florida homeowners.

Help from a Foreclosure Attorney

If you have been a victim of a Foreclosure Relief Scam or feel that your foreclosure process can use legal assistance, contact a Foreclosure Attorney in Florida today to consult your case.