Florida Foreclosure Fraud Protection Law Enacted.
The Attorney General clarified that this new law will not apply to the Attorney / Client relationship or the way attorneys are paid when they are hired to help distressed homeowners. This law brings much needed protection to those consumers / homeowners who have been taken advantage of by Mortgage Loan Modification Companies – many of which are scams…Effective October 1st, 2008
501.1377 Violations involving homeowners during the course of residential foreclosure proceedings.
(1) LEGISLATIVE FINDINGS AND INTENT.–The Legislature finds that homeowners who are in default on their mortgages, in foreclosure, or at risk of losing their homes due to nonpayment of taxes may be vulnerable to fraud, deception, and unfair dealings with foreclosure-rescue consultants or equity purchasers. The intent of this section is to provide a homeowner with information necessary to make an informed decision regarding the sale or transfer of his or her home to an equity purchaser. It is the further intent of this section to require that foreclosure-related rescue services agreements be expressed in writing in order to safeguard homeowners against deceit and financial hardship; to ensure, foster, and encourage fair dealing in the sale and purchase of homes in foreclosure or default; to prohibit representations that tend to mislead; to prohibit or restrict unfair contract terms; to provide a cooling-off period for homeowners who enter into contracts for services related to saving their homes from foreclosure or preserving their rights to possession of their homes; to afford homeowners a reasonable and meaningful opportunity to rescind sales to equity purchasers; and to preserve and protect home equity for the homeowners of this state.
(2) DEFINITIONS.–As used in this section, the term:
(a) “Equity purchaser” means any person who acquires a legal, equitable, or beneficial ownership interest in any residential real property as a result of a foreclosure-rescue transaction. The term does not apply to a person who acquires the legal, equitable, or beneficial interest in such property:
1. By a certificate of title from a foreclosure sale conducted under chapter 45;
2. At a sale of property authorized by statute;
3. By order or judgment of any court;
4. From a spouse, parent, grandparent, child, grandchild, or sibling of the person or the person’s spouse; or
5. As a deed in lieu of foreclosure, a workout agreement, a bankruptcy plan, or any other agreement between a foreclosing lender and a homeowner.
(b) “Foreclosure-rescue consultant” means a person who directly or indirectly makes a solicitation, representation, or offer to a homeowner to provide or perform, in return for payment of money or other valuable consideration, foreclosure-related rescue services. The term does not apply to:
1. A person excluded under s. 501.212.
2. A person acting under the express authority or written approval of the United States Department of Housing and Urban Development or other department or agency of the United States or this state to provide foreclosure-related rescue services.
3. A charitable, not-for-profit agency or organization, as determined by the United States Internal Revenue Service under s. 501(c)(3) of the Internal Revenue Code, which offers counseling or advice to an owner of residential real property in foreclosure or loan default if the agency or organization does not contract for foreclosure-related rescue services with a for-profit lender or person facilitating or engaging in foreclosure-rescue transactions.
4. A person who holds or is owed an obligation secured by a lien on any residential real property in foreclosure if the person performs foreclosure-related rescue services in connection with this obligation or lien and the obligation or lien was not the result of or part of a proposed foreclosure reconveyance or foreclosure-rescue transaction.
5. A financial institution as defined in s. 655.005 and any parent or subsidiary of the financial institution or of the parent or subsidiary.
6. A licensed mortgage broker, mortgage lender, or correspondent mortgage lender that provides mortgage counseling or advice regarding residential real property in foreclosure, which counseling or advice is within the scope of services set forth in chapter 494 and is provided without payment of money or other consideration other than a mortgage brokerage fee as defined in s. 494.001.
(c) “Foreclosure-related rescue services” means any good or service related to, or promising assistance in connection with:
1. Stopping, avoiding, or delaying foreclosure proceedings concerning residential real property; or
2. Curing or otherwise addressing a default or failure to timely pay with respect to a residential mortgage loan obligation.
(d) “Foreclosure-rescue transaction” means a transaction:
1. By which residential real property in foreclosure is conveyed to an equity purchaser and the homeowner maintains a legal or equitable interest in the residential real property conveyed, including, without limitation, a lease option interest, an option to acquire the property, an interest as beneficiary or trustee to a land trust, or other interest in the property conveyed; and
2. That is designed or intended by the parties to stop, avoid, or delay foreclosure proceedings against a homeowner’s residential real property.
(e) “Homeowner” means any record title owner of residential real property that is the subject of foreclosure proceedings.
(f) “Residential real property” means real property consisting of one-family to four-family dwelling units, one of which is occupied by the owner as his or her principal place of residence.
(g) “Residential real property in foreclosure” means residential real property against which there is an outstanding notice of the pendency of foreclosure proceedings recorded pursuant to s. 48.23.
(3) PROHIBITED ACTS.–In the course of offering or providing foreclosure-related rescue services, a foreclosure-rescue consultant may not:
(a) Engage in or initiate foreclosure-related rescue services without first executing a written agreement with the homeowner for foreclosure-related rescue services; or
(b) Solicit, charge, receive, or attempt to collect or secure payment, directly or indirectly, for foreclosure-related rescue services before completing or performing all services contained in the agreement for foreclosure-related rescue services.
(4) FORECLOSURE-RELATED RESCUE SERVICES; WRITTEN AGREEMENT.–
(a) The written agreement for foreclosure-related rescue services must be printed in at least 12-point uppercase type and signed by both parties. The agreement must include the name and address of the person providing foreclosure-related rescue services, the exact nature and specific detail of each service to be provided, the total amount and terms of charges to be paid by the homeowner for the services, and the date of the agreement. The date of the agreement may not be earlier than the date the homeowner signed the agreement. The foreclosure-rescue consultant must give the homeowner a copy of the agreement to review not less than 1 business day before the homeowner is to sign the agreement.
(b) The homeowner has the right to cancel the written agreement without any penalty or obligation if the homeowner cancels the agreement within 3 business days after signing the written agreement. The right to cancel may not be waived by the homeowner or limited in any manner by the foreclosure-rescue consultant. If the homeowner cancels the agreement, any payments that have been given to the foreclosure-rescue consultant must be returned to the homeowner within 10 business days after receipt of the notice of cancellation.
(c) An agreement for foreclosure-related rescue services must contain, immediately above the signature line, a statement in at least 12-point uppercase type that substantially complies with the following:
HOMEOWNER’S RIGHT OF CANCELLATION
YOU MAY CANCEL THIS AGREEMENT FOR FORECLOSURE-RELATED RESCUE SERVICES WITHOUT ANY PENALTY OR OBLIGATION WITHIN 3 BUSINESS DAYS FOLLOWING THE DATE THIS AGREEMENT IS SIGNED BY YOU.
THE FORECLOSURE-RESCUE CONSULTANT IS PROHIBITED BY LAW FROM ACCEPTING ANY MONEY, PROPERTY, OR OTHER FORM OF PAYMENT FROM YOU UNTIL ALL PROMISED SERVICES ARE COMPLETE. IF FOR ANY REASON YOU HAVE PAID THE CONSULTANT BEFORE CANCELLATION, YOUR PAYMENT MUST BE RETURNED TO YOU NO LATER THAN 10 BUSINESS DAYS AFTER THE CONSULTANT RECEIVES YOUR CANCELLATION NOTICE.
TO CANCEL THIS AGREEMENT, A SIGNED AND DATED COPY OF A STATEMENT THAT YOU ARE CANCELING THE AGREEMENT SHOULD BE MAILED (POSTMARKED) OR DELIVERED TO (NAME) AT (ADDRESS) NO LATER THAN MIDNIGHT OF (DATE) .
IMPORTANT: IT IS RECOMMENDED THAT YOU CONTACT YOUR LENDER OR MORTGAGE SERVICER BEFORE SIGNING THIS AGREEMENT. YOUR LENDER OR MORTGAGE SERVICER MAY BE WILLING TO NEGOTIATE A PAYMENT PLAN OR A RESTRUCTURING WITH YOU FREE OF CHARGE.
(d) The inclusion of the statement does not prohibit the foreclosure-rescue consultant from giving the homeowner more time in which to cancel the agreement than is set forth in the statement, provided all other requirements of this subsection are met.
(e) The foreclosure-rescue consultant must give the homeowner a copy of the signed agreement within 3 hours after the homeowner signs the agreement.
(5) FORECLOSURE-RESCUE TRANSACTIONS; WRITTEN AGREEMENT.–
(a) 1. A foreclosure-rescue transaction must include a written agreement prepared in at least 12-point uppercase type that is completed, signed, and dated by the homeowner and the equity purchaser before executing any instrument from the homeowner to the equity purchaser quitclaiming, assigning, transferring, conveying, or encumbering an interest in the residential real property in foreclosure. The equity purchaser must give the homeowner a copy of the completed agreement within 3 hours after the homeowner signs the agreement. The agreement must contain the entire understanding of the parties and must include:
a. The name, business address, and telephone number of the equity purchaser.
b. The street address and full legal description of the property.
c. Clear and conspicuous disclosure of any financial or legal obligations of the homeowner that will be assumed by the equity purchaser.
d. The total consideration to be paid by the equity purchaser in connection with or incident to the acquisition of the property by the equity purchaser.
e. The terms of payment or other consideration, including, but not limited to, any services that the equity purchaser represents will be performed for the homeowner before or after the sale.
f. The date and time when possession of the property is to be transferred to the equity purchaser.
2. A foreclosure-rescue transaction agreement must contain, above the signature line, a statement in at least 12-point uppercase type that substantially complies with the following:
I UNDERSTAND THAT UNDER THIS AGREEMENT I AM SELLING MY HOME TO THE OTHER UNDERSIGNED PARTY.
3. A foreclosure-rescue transaction agreement must state the specifications of any option or right to repurchase the residential real property in foreclosure, including the specific amounts of any escrow payments or deposit, down payment, purchase price, closing costs, commissions, or other fees or costs.
4. A foreclosure-rescue transaction agreement must comply with all applicable provisions of 15 U.S.C. ss. 1600 et seq. and related regulations.
(b) The homeowner may cancel the foreclosure-rescue transaction agreement without penalty if the homeowner notifies the equity purchaser of such cancellation no later than 5 p.m. on the 3rd business day after signing the written agreement. Any moneys paid by the equity purchaser to the homeowner or by the homeowner to the equity purchaser must be returned at cancellation. The right to cancel does not limit or otherwise affect the homeowner’s right to cancel the transaction under any other law. The right to cancel may not be waived by the homeowner or limited in any way by the equity purchaser. The equity purchaser must give the homeowner, at the time the written agreement is signed, a notice of the homeowner’s right to cancel the foreclosure-rescue transaction as set forth in this subsection. The notice, which must be set forth on a separate cover sheet to the written agreement that contains no other written or pictorial material, must be in at least 12-point uppercase type, double-spaced, and read as follows:
NOTICE TO THE HOMEOWNER/SELLER
PLEASE READ THIS FORM COMPLETELY AND CAREFULLY. IT CONTAINS VALUABLE INFORMATION REGARDING CANCELLATION RIGHTS.
BY THIS CONTRACT, YOU ARE AGREEING TO SELL YOUR HOME. YOU MAY CANCEL THIS TRANSACTION AT ANY TIME BEFORE 5:00 P.M. OF THE THIRD BUSINESS DAY FOLLOWING RECEIPT OF THIS NOTICE.
THIS CANCELLATION RIGHT MAY NOT BE WAIVED IN ANY MANNER BY YOU OR BY THE PURCHASER.
ANY MONEY PAID DIRECTLY TO YOU BY THE PURCHASER MUST BE RETURNED TO THE PURCHASER AT CANCELLATION. ANY MONEY PAID BY YOU TO THE PURCHASER MUST BE RETURNED TO YOU AT CANCELLATION.
TO CANCEL, SIGN THIS FORM AND RETURN IT TO THE PURCHASER BY 5:00 P.M. ON (DATE) AT (ADDRESS) . IT IS BEST TO MAIL IT BY CERTIFIED MAIL OR OVERNIGHT DELIVERY, RETURN RECEIPT REQUESTED, AND TO KEEP A PHOTOCOPY OF THE SIGNED FORM AND YOUR POST OFFICE RECEIPT.
I (we) hereby cancel this transaction.
Seller’s Signature
Printed Name of Seller
Seller’s Signature
Printed Name of Seller
Date
(c) In any foreclosure-rescue transaction in which the homeowner is provided the right to repurchase the residential real property, the homeowner has a 30-day right to cure any default of the terms of the contract with the equity purchaser, and this right to cure may be exercised on up to three separate occasions. The homeowner’s right to cure must be included in any written agreement required by this subsection.
(d) In any foreclosure-rescue transaction, before or at the time of conveyance, the equity purchaser must fully assume or discharge any lien in foreclosure as well as any prior liens that will not be extinguished by the foreclosure.
(e) If the homeowner has the right to repurchase the residential real property, the equity purchaser must verify and be able to demonstrate that the homeowner has or will have a reasonable ability to make the required payments to exercise the option to repurchase under the written agreement. For purposes of this subsection, there is a rebuttable presumption that the homeowner has a reasonable ability to make the payments required to repurchase the property if the homeowner’s monthly payments for primary housing expenses and regular monthly principal and interest payments on other personal debt do not exceed 60 percent of the homeowner’s monthly gross income.
(f) If the homeowner has the right to repurchase the residential real property, the price the homeowner pays may not be unconscionable, unfair, or commercially unreasonable. A rebuttable presumption, solely between the equity purchaser and the homeowner, arises that the foreclosure-rescue transaction was unconscionable if the homeowner’s repurchase price is greater than 17 percent per annum more than the total amount paid by the equity purchaser to acquire, improve, maintain, and hold the property. Unless the repurchase agreement or a memorandum of the repurchase agreement is recorded in accordance with s. 695.01, the presumption arising under this subsection shall not apply against creditors or subsequent purchasers for a valuable consideration and without notice.
(6) REBUTTABLE PRESUMPTION.– Any foreclosure-rescue transaction involving a lease option or other repurchase agreement creates a rebuttable presumption, solely between the equity purchaser and the homeowner, that the transaction is a loan transaction and the conveyance from the homeowner to the equity purchaser is a mortgage under s. 697.01. Unless the lease option or other repurchase agreement, or a memorandum of the lease option or other repurchase agreement, is recorded in accordance with s. 695.01, the presumption created under this subsection shall not apply against creditors or subsequent purchasers for a valuable consideration and without notice.
(7) VIOLATIONS. – A person who violates any provision of this section commits an unfair and deceptive trade practice as defined in part II of this chapter. Violators are subject to the penalties and remedies provided in part II of this chapter, including a monetary penalty not to exceed $15,000 per violation.
This information is useful; key things to prevent fraud would be full disclosure of all the related parties and their role on the other side of the deal
and at the top of the list would be ANY potential conflict or association of the homeowners’ attorney with any one of the other side —including the servicers attorneys
for example, lets say a state allows binding arbitration or a mediation process and the servicers have a right to input as the selection of the mediator–or can oppose apptmt
now if an atty that usually represents homeowners does too much mediation work —- he gets dependant on mediation—-there can be not only an appearance of impropriety byt outright abuses—-the potential here or in more aggregious kickback deals can be unimaginable——im talking about potential over a wide range of geographic and economic spectrum
an independent appointed master as mediator —without secondary income streams can prevent dependace on lawyers in the industry routinely taking off their hats as homeowner advocates and putting on mediator hats –and get chummy with the opposition
pretty soon the advocate forgets hes supposed to be one and just acts as mediator role-knowingly or not———-this basically makes the homeowners role one of persuading the homeowner to agree to a deal that the mediator routinely imposes———-and the homeowner loses the advocate role that would be necessary to properly apply all the law to all the facts–not just one size fits all——–for example should not a predatory loan collection require a second look?
they should expressly reinforce the statutoey amendments by reasserting that the Statute of Frauds applies in the most strict sense! Now we are going to be seeing increasing numbers of short sales that —no matter what the legislation says—will come to involve related parties. people that are friends of mgmt of the servicers will become involved as buyers to then “flip” the house at a profit with a quick finance plan-probly LPS offered service——
what this will lead to is claims by such predatory purchasers to ” verbally” agreed contracts at prices and under terms they dictate. This is a nasty practice that dates back to at leas 16th century england—when it was banned by the statute of frauds. This oldest of land statutes requires an agreement to convey land to be in writing and signed by the person to be bound.
read your state version——-this should be strictly enforced to mean what it did in 1600—a hard copy-paper document signed by the grantor or designated legal representative. THE ATTORNEY FOR THE HOMEOWNER SHOULD NOT BE AUTHORIZED TO MEET THE SIGNED BY REQUIREMENT. no way nohow!!! or the statute is avoided.
Also the more innovative predatory buyers attys could begin to assert a claimed agreement to convey land [at predatory terms] by attempting to string together emails and notes –enhanced by conversations —–to meet the “written and signed parts of the statute
mere purchase negotiations terms discussed can become deemed agreements–agreements attempted to be imposed in slices such as; “you clearly agreed in this email that you would sell your house to joe blow—-and now joe can just fill in the rest of the deal wit terms that he thinks are reasonable and customary”
believe it-it is a scam as old as time—and the thing is the homeowner may be perfectly right here–and have perfect right to have the claim thrown out but will run out of money to defend before the predator will
and further-if the predator decides he can make a claim by accusation alone and it doesnt get tossed out—whats his next step?
discovery of emails between the homeowner and his attorney !
Discovery of emails between husband and wife–as in did they discuss terms and agree to terms between them –or not as the case may be
These issues can all be laid to rest if the claimant seeking specific enforcement of an agreement to convey realty is required to attach to the claim, however raised, a single comprehensive written agreement signed by the homeowners or their actual authorized[written] representative other that the attorney on the case for them.
otherwise—-predatory buyer will assert some slip of an email received from homeowners atty that says “ive got em in general agreement”
next thing the predator will be demanding to question hoeownr atty in depositions about conversations and the homeowner about what se said to whom when
so now the homeowner is really flumaxed—-now hes got his atty being questioned –hes being questioned and all their emails are now being demanded like hes a criminal syndicate
hes always heard about atty client privilege—–hows this square? exception???
Immediately the homeowners rights to due process are smasshed—-hes afraid to communicate with his own attorney—-hows he gonna help in his defense? hows his atty going to fedend if hes facing an inquisitiion on this red herring mission that is a modern day version of actions violative of statute of frauds. Theres damage just by the threat—the threat itself should be actionable.
But what if the homeowner screws up his courage and even w/o help from his stricken atty——homeowner says “this is just not right” and refuses to cooperate –refuses to waive atty-client privilege –even after judge says well theres this fine print exception to that here—so homeowner says NO WAY NO HOW——judge gets choice——-jail for contempt in new debtors prison or just say the fact question of the verbally agreed sale is admitted by the recalcitrant homeowner
get ready for this kind of stuff unless the laws and legal interpretations are absolutely strict and clear and some sanctions are attached to making claims that are not supported by the signed sheepskin
so even if homeowner scews up his courage–risks says
One of the most rewarding things about this epic
battle that is the foreclosure fight is meeting
homeowners and other advocates who are standing
up and fighting for themselves and fighting for
the heart and soul of our courthouses.
Our courts, our judges, our way of life is being
transformed right before our eyes as real people
are going into our courthouses and fighting for
their homes and their own families. If we do
make it out of this profound economic crisis…and
unfortunately that is very much uncertain at this
point in time…our courts and our legal system will
be better off. It may be a bit of a difficult
transition at first as courts have to cope with
accommodating consumers, but from what I’ve seen
our courts and our judges are adapting.
In some ways I’ll bet many of the judges appreciate
seeing real people in their courtrooms. For decades
judges have slaved away, largely in obscurity with
only other lawyers to interact with. Now, they see
real people and hear their stories first hand, not
filtered through their lawyers. Given the impossible
task and pressures they are under, I think our judges
are largely handling this crisis very well. Keep
supporting those who are out their doing their jobs
and let’s all keep working to help every judge
understand that the equities in these cases largely
favor that homeowner standing in front of them.
Read below a comment made by a reader, because it
really makes an important point we all should keep
in mind….
Unbeknownst to many people, we have only seen the
tip of the mortgage crisis. The scariest part
currently of this crisis is that people are losing
hope. They are becoming indifferent to losing
their homes and are losing their pride in living
the American dream. The common consensus is “why
bother…the bank doesn’t care…why should I?
I will just go rent.” The American dream has gone
from aspiring to own your own home to just hoping
to keep your home.
Finally, please watch these videos. It’s encouraging
when the press is reporting the foreclosure story
from the consumer point of view. Stories like this
one and others are helping to shift the public
discussion about foreclosures into a much more
sophisticated discussion that considers both the
root causes of this crisis and the potential long
term consequences.
Make sure to watch the videos here and
KEEP UP THE GOOD FIGHT!
http://www.righttocancel.com/
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If you feel that you have been a victim of predatory lending
practices or are currently facing a foreclosure, contact us
today and learn how you can take action against your lender.
http://www.righttocancel.com/
Office: 954-281-0140