Attorney General McCollum Applauds Signing of Foreclosure Rescue Fraud Prevention Act into Law

 

Tallahassee, FL –  May 29, 2008 – General Bill McCollum today applauded Governor Charlie Crist for signing The Foreclosure Rescue Fraud Prevention Act of 2008 into law. The legislation, which passed this session as HB 643 and was developed in part by members of the Attorney General’s Mortgage Fraud Task Force, will ensure that homeowners are properly informed about their rights before signing a contract with a foreclosure rescue entity in addition to other protections.

 

 

The Foreclosure Rescue Fraud Prevention Act of 2008 requires that a foreclosure rescue consultant – a person who tries to arrange a new payment plan with lender or other alternative to foreclosure – provide a written agreement to the consumer and obtain the consumer’s signature before beginning any services. The legislation further requires the rescue consultant to include in the written agreement a specific notice of the homeowners’ right to cancel, including the procedure for cancelling, and a disclosure that the consumer should contact his or her lender first before signing because the lender may be willing to negotiate a payment plan free of charge.

 

“Desperate homeowners on the brink of losing their homes are grasping for any assistance available, and too many of them are falling victim to scam artists,” said Sen. Mike Fasano, R- New Port Richey, the bill’s Senate sponsor. “This legislation provides much-needed safeguards to assist families in staying in their homes.”

 

 “This new law will protect homeowners from unscrupulous people who would try to prey upon them in their time of distress,” said House sponsor, Rep. Clay Ford, R-Pensacola. “The Foreclosure Rescue Fraud Prevention Act includes key requirements to help homeowners avoid costly mistakes.”

 

Last year, as a result of substantial increases in interest rates and monthly housing costs, more than 245,000 mortgage foreclosures occurred in Florida. This ranks the Sunshine State second in the nation in the number of foreclosures. Florida also had the highest rate of mortgage fraud last year and as the number of Floridians facing foreclosure increases, so does the number and variety of scams devised to defraud these vulnerable consumers.

 

"Our state has taken a good first step toward protecting Floridians from unscrupulous fraud artists who prey on those most vulnerable to the current downturn in housing and credit markets," said Lori Parham, AARP’s Florida state director. "AARP applauds Attorney General McCollum, Sen. Fasano and Rep. Ford for their leadership on behalf of consumers."

 

Additional provisions in the new law require that before any instrument that transfers title to the property can be executed, the buyer (investor) must execute a separate contract with all 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 is afforded a 30-day right to cure any default of the terms of the repurchase agreement. The repurchase price cannot exceed a certain threshold and the repurchase agreement is presumed to be a loan. The Foreclosure Rescue Fraud Prevention Act of 2008 will go into effect October 1.