The Florida Foreclosure Fraud Weblog

Countrywide and Florida Attorney General Bill McCollum have reached a settlement of the wide-ranging fraud claims filed by the state earlier this year. The details remain to be worked out, but here are several key features to the settlement that could benefit more than 50,000 Florida homeowners with a Countrywide loan.

Cash payments

Floridians who have lost their homes due to some of Countrywide’s challenged practices may be eligible for cash payments in compensation. Up to $20 million may go to Florida’s former homeowners.

Late fee waivers

Countrywide borrowers who were assessed late fees due to improperly-written loans may be eligible for waivers of those fees. Up to $4 million has been set aside to benefit Florida homeowners with late-fee waivers.

Loan modification and foreclosure abatement

The most important feature of the settlement is the prospect of modifying the loans of qualified Countrywide borrowers, converting adjustable-rate loans into fixed-rate loans with more affordable interest rates, using HUD income-to-debt ratio guidelines. Countrywide has also agreed to hold off on filing or pursuing foreclosure against any borrowers who might qualify for relief.

Toll-free Countrywide hotline

Not all homeowners will qualify, so keep an eye out for more details as they develop. Countrywide has a toll free hotline for those who want more information: 1-800-669-6607.

Attorney General Bill McCollum is at it again, targeting perpetrators of mortgage fraud. This time, McCollum has sued some twenty-five defendants who allegedly skimmed over $6 million out of approximately 60 home loan transactions. Here’s some of how they did it:

Starting in July 2005 and continuing through at least January 2007, three of the ring’s leaders allegedly defrauded lenders by recruiting “straw buyers” with good credit and using them to create false applications to buy homes throughout Central Florida.

The lawsuit, filed by the Attorney General’s Mortgage Fraud Task Force, claims the ring conspired with Realtors to artificially inflate purchase prices, thus enabling them to obtain larger mortgage loans.

One potential defendant was actually left out, because “real estate agents are exempted from the Deceptive and Unfair Trade Practices Act under which the others are being sued.” However, she and the others may be subject to criminal charges beyond the civil suit.

Of the 60 homes, about 50 are now in foreclosure.

The Florida Bar News reports on Florida AG Bill McCollum’s action exempting Florida attorneys from portions of the Foreclosure Rescue Act. Florida Bar News editor Gary Blankenship has been following this story for some time, and has written a nice piece explaining both the problem and the solution. As an added bonus, he quotes me at some length on the AG’s action.

Bill McCollum, Florida’s attorney general, as been very active lately, going after a number of companies he has accused of foreclosure rescue scams and unfair mortgage-related practices, according to the Tampa Bay Business Journal.

…McCollum has filed five cases against companies he believes have conducted questionable, if not illegal, acts in regard to mortgage and foreclosure fraud since assembling his Mortgage Fraud Task Force last September.

The defendants include:

• the highly-publicized Countrywide Financial;
• A Realty Rx LLC;
• Florida Housing Council LLP;
• Equity Investment Capital Management Inc.;
• Star Enterprises LLC.

Countrywide stands accused of defrauding its investors by making asset-based loans to individuals who couldn’t possibly support those payments, but telling investors that all borrowers were thoroughly vetted for ability to pay.  A Realty RX has been sued for selling realty without a license and other fraudulent practices - including possible foreclosure rescue fraud.

The others? Foreclosure rescue scammers.