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| McCollum |
The legislation, designated as HB 643 during the recently ended legislative session, was drafted in part by members of the AG's Mortgage Fraud Task Force. It is designed to ensure that homeowners are properly informed about their rights before signing a contract with a foreclosure rescue organization.
McCollum proposed the bill in January after filing a lawsuit against South-Florida based National Foreclosure Management. The suit charged the company with defrauding at least 80 homeowners of about $1.7 million.
In the suit, the AG said National Foreclosure Management targeted homeowners who faced foreclosure and offered to hold the title to their homes for a year while refinancing their debt and providing them with credit counseling as the owner continued to live in the home. Instead, the company sold the homes to investors. The homeowners were then obligated to make lease payments that exceeded the original mortgage payments. Many of the homeowners were then forced out of their homes.
In applauding the governor's signing, McCollum said, "Florida homeowners now have an important tool to protect their most valuable possession - their homes. By protecting our citizens who face the threat of foreclosure from those individuals who would prey on them, this law will ensure that homeowners will not be further victimized at a time of personal financial crisis."
The act requires that a "foreclosure rescue consultant" give the homeowner an agreement in writing that the homeowner must sign before the consultant can offer any services.
Further, the agreement must spell out the homeowner's right to cancel, including the procedure for canceling. The rescue consultant also must include a disclosure that homeowners should contact their other lender before signing because the original lender may be willing to negotiate a payment plan free of charge.
Additionally, the buyer or investor of the home must sign a separate contact spelling out all terms and conditions of the proposed property transfer before any documents that transfer the title can be executed. If the homeowner makes payments to the new owner while remaining in the home, the homeowner is given 30 days to change the terms of the contract. Finally, the repurchase price cannot exceed a certain threshold and the repurchase agreement is presumed to be a loan.
In 2007 more than 245,000 foreclosures occurred in Florida, placing the state second in the nation for foreclosures, according to the AG's office. Florida also had the highest rate of mortgage fraud.
The law takes effect Oct. 1.
Reporter Melvin Baker can be contacted at melvin.baker@gmail.com
Filed Under: State AGs