Foreclosure Rescue Fraud Prevention Act
September 24, 2008
If you’re a real estate investor, real estate agent or a homeowner in foreclosure, you need to be aware of a new law going into effect on October 1, 2008. Many of the clients that we have have been asking us lately what this new law is all about. The new law is titled the Foreclosure Rescue Fraud Prevention Act, and becomes Florida Statute sec. 501.1377.
Effectively, without a serious change in the way their business is conducted, most real estate agents will NOT be able to be involved in short sales in the State of Florida any longer!
This law came about as a way to combat, prevent and prohibit certain fraudulent schemes that many homeowners facing foreclosure end up being the victims of.
Foreclosure rescue is not necessarily fraudulent or even harmful, in fact we often work with homeowners in distress and many of my clients do as well. However there are some not so savory individuals using “rescue” techniques to take advantage of and defraud homeowners. Talk to anyone in foreclosure and they will tell you that they are deluged by inndividuals or firms that claim they can help them avoid foreclosure.
The new law defines a “foreclosure-rescue consultant” as 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. “Foreclosure-related rescue services” means any good or service related to, or promising assistance in connection with stopping, avoiding, or delaying foreclosure proceedings concerning residential real property or curing or otherwise addressing a default or failure to timely pay with respect to a residential mortgage loan obligation.
The original bill included, as an exception to the definition, “A person licensed to practice law in this state when rendering foreclosure-related rescue services in the course of his or her practice as an attorney at law.” It also included a clause providing an exception for Realtors as well. However, on March 6, 2007, the Committee on Financial Institutions voted to recommend a strike-all amendment.
The amendment, “Narrows the exemptions for entities that are considered a ‘foreclosure-rescue consultant’ by removing lawyers, real estate brokers, and mortgage brokers.” See House of Representatives Staff Analysis dated March 14, 2008. The final version signed by Governor Christ removes attorneys and Realtors as being an exception to the definition. Therefore, real estate agents and even attorneys are subject to the law.
The basic provisions of this law are to:
- Provide the homeowner with the necessary information regarding the services offered and their rights;
- Prohibit misleading representations and unfair contract terms;
- Provide certain minimum requirements for any contracts including being in writing
- Provide that the rescue consultant can not charge any fees until all the services listed in the contract have been completed;
- Provide for a “cooling-off” period for the homeowner to cancel the contract or a transfer of their home; and to
- Provide that all transfers to a rescue consultant involving a lease-back or sell-back provision creates a rebuttable presumption that the transaction is a loan transaction and the conveyance is a mortgage to the equity purchaser from the homeowner.
The law covers both foreclosure-related services agreements and foreclosure-rescue transactions.Your compliance with the new Florida legislation requires not just providing certain disclosures but it also requires that the disclosures be provided in a very specific delivery method.
How serious are the ramifications if this law is not adhered to? By JUST HAVING THE SELLERS SIGN ANY DOCUMENTS when you first see them is a $15,000 violation! By you not giving them a copy of what they signed within three hours is ANOTHER $15,000 violation, and it could get much worse if the law is not followed correctly.
There are many real estate agents out there absolutely winging it when it comes to short sales. They have no experience and no educational background on how to properly effect a successful short sale.
Many are flat out lazy and referring homeowners to “short sale loss mitigation” firms that charge homeowners a fee upfront. Well on October 1, 2008 this will no longer be legal. We have talked to some of these firms and it is not uncommon for them to have literally thousands of short sale cases that they are working on. Why? becasue real estate agents don’t know how to handle short sales and they simply drop the transaction into the laps of these “companies”.
So on October 1, 2008 it seems as though a large number of homeowenrs will not have the opportunity for someone to assist them with their short sale unless they can find a competent real estate agent willing to NOT take any money upfront and to work diligently for months hoping for an approval on a short sale. Good luck finding that agent!
You could also contact an attorney to see if perhaps they can represent you as should be the case anyway. In any event, if you are a homeowner in foreclosure here in the Fort Lauderdale real estate area, please do not hesitate to give me a call or shoot me a message via the form below and it would be my pleasure to speak to you about your situation.
UPDATE: If you are a homeowner in foreclosure, a real estate agent working on foreclosures or short sales, or an investor negotiating and buying foreclosures, you may want to download this FREE Special Report:The Foreclosure Rescue Fraud Prevention Act: Is It The End Of Short Sales For Realtors.
Check out this story: Loan Modifications Don’t Work!
Here some other posts you may find interesting...
Fort Lauderdale Real Estate
Fort Lauderdale Homes And Condos For Sale
If you are interested in learning more about buying a home or condo in Fort Lauderdale or anywhere in South Florida; or if you need any information about the Fort Lauderdale real estate market, please feel free to contact me and it would be my pleasure to assist you.You can contact me at the number shown below or please feel free to contact me by the form below and I, or one of my assistants, will be sure to get right back to you within a few hours, if not sooner.
If you are inquiring about a specific property shown on this site, please include the address of the property in the comment section of the contact form below.
Bank Owned Properties In Fort Lauderdale
Foreclosures In Fort Lauderdale
Homes Fort Lauderdale
Commission Blueprint 2.0
Social Media Money System
Short Sale
Robin Sing-Cunningham
robins@robinashley.com
Access USA Realty
Local Fort Lauderdale | South Florida : 954-709-7461
My Assistants:
Barry Johnson: bjohnson@robinashley.com