The Florida Foreclosure Fraud Weblog

A new report claims that Florida leads the nation in mortgage fraud.

In fact, 24 percent of fraudulent loans reported to the [Mortgage Asset Research Institute] during the first quarter originated on properties in Florida.

The most common kind of fraud was application fraud, including misstating income and false identification. I wonder how many of those involved were brokers with criminal records?

Fighting on two fronts

Imagine getting called up for military duty, torn away from your family, your normal life, and your job. Imagine the stress of going off to war, and then imagine coming back having lost your home. I am amazed and saddened to learn that for too many of our soldiers, sailors, and airmen, this is not a drill - it’s their reality.

Foreclosures against deployed military violate federal law

NPR reports that many active-duty military are falling prey to banks hungry for foreclosures. Not only does this lender practice shock the conscience, it’s against the law. The Servicemembers Civil Relief Act, passed by Congress during World War II, is supposed to protect active-duty servicemembers from exactly this situation. If you’re on active duty - and that includes any time in basic training, as well as time actually spent overseas - the law provides important protections against foreclosures and other financial hardships that sometimes affect our men and women in uniform.

Relief from Foreclosure

The SCRA includes several provisions to provide active military with relief from foreclosure - before, during, and even after the foreclosure case. Some of those powers include preventing entry of default judgments, postponing court cases, and setting aside judgments that the court has already entered. Because these foreclosures violate federal law, victims might also find relief under other laws, such as those preventing unfair or deceptive debt collection practices. Members of the military, and their families, facing foreclosure while on active duty should consult with an attorney right away to plan for quick action to save their family home.

Don Saxon, chief regulator overseeing Florida’s licensed mortgage brokers, resigned at yesterday’s meeting of Florida’s Cabinet. Saxon resigned rather than try to defend his job after a surprising move by Governor Charlie Crist supporting a motion to fire Saxon.

Saxon has come under heavy fire for failing to protect Florida homeowners from convicted felons working as mortgage brokers, both when they applied for licenses, and even when they continued to steal money from borrowers while acting as brokers.

The Cabinet also passed new emergency rules restricting the issuance of licenses to criminals in the future, but Attorney General Bill McCollum expressed some doubt if the emergency rules were within the Commission’s legal authority: “‘I think we ought to try it,’ the attorney general said. ‘It may be legal, it may not be legal.’” The Cabinet did not act to revoke the licenses of felons currently brokering loans.

The last part of the Miami Herald exposé has run, and the findings are damning.  Not only did Florida’s Office of Financial Regulation fail to keep felons from entering the mortgage brokering industry, but once they were in and began stealing money from homeowners, the OFR didn’t pull their licenses.

Complaints to the Office of Financial Regulation — the state agency created to police the industry — were routinely ignored, leaving consumers to fend for themselves, according to public records and interviews.

Among those dismissed: 10 complaints against a notorious Broward brokerage whose president eventually pleaded guilty to $21 million worth of mortgage fraud.

During an eight-month investigation, The Miami Herald analyzed more than 1,400 final orders issued by the agency between 2000 and 2007 and posted on the OFR website, reviewed quarterly reports the agency presented to the Florida Cabinet and scrutinized the agency’s annual industry newsletters.

The article blames Saxon for failing to effectively lobby for more staff to enforce existing regulations.