The Florida Foreclosure Fraud Weblog

If you want stricter laws protecting homewoners from predators looking to scam foreclosure victims, then Florida has some good news for you.

The state has enacted a new law, effective on October 1, 2008, aimed at equity-skimming and advance-fee fraud schemes designed to steal from Florida homeowners what little money or equity they may have left.

The law doesn’t apply to everyone - lawyers, for example, are already regulated by the Florida Bar and are exempt from the new law - but anyone who’s not exempt and offers services to foreclosure homeowners has to comply with strict new requirements, including written disclosure requirements, a cooling-off period, and a prohibition from taking fees before all services are complete. The law also makes it easier for homeowners to cancel any transaction where a foreclosure “consultant” tricks the homeowner into singing over a deed to their home.

Perhaps most important, for homeowners who have fallen victim to foreclosure predators, anyone who violates the new law may have to pay penalties of up to $15,000. Anyone who thinks they’ve been a victim of foreclosure rescue scams after October 1 should contact a lawyer to find out if they have any claims against a scammer.

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.

President Bush this morning signed into law new federal legislation aimed at addressing the nation’s current foreclosure crisis. Some of the provisions of this new law, which takes effect October 1, 2008, may offer relief to certain homeowners in foreclosure. Here’s how.

FHA-backed Refinancing

The Federal Housing Authority now has the ability to insure up to $300 billion dollars in loans to allow troubled homeowners to refinance their home loans. Banks would be more willing to extend loans to qualified homeowners because the loans are backed by the federal government.

Who Qualifies

In order to qualify for a new FHA-backed loan, the homeowners must meet certain criteria.

• They must live in the home - no landlords allowed.
• They must currently have home loans issued between January 2005 and June 2007.
• They must be spending at least 31% of their gross monthly income on mortgage debt.
• A borrower may either be current or behind on their existing loans, but they will have to prove that they cannot continue to make their current payments.
• Borrowers must first pay off any other debt on the home (such as home equity loans) and may not get a new one for five years, except to pay for maintaining the home.
• The new loans are subject to FHA approval.
• The original lender would have to agree to take a substantial loss on the original loan, but gets to avoid filing foreclosure - which might cost them more in the long run.

(Source: CNNMoney )

Depending on each homeowner’s particular circumstances, this might be a viable way to get out of a bad loan and into a more affordable one - after October 1. Officials in the Bush administration, though, are already bad-mouthing the new law, saying that other laws already in place will help more homeowners than this one, and noting that Congress failed to provide funding for the new loan guarantees. Steve Preston, Secretary of Housing and Urban Development, said: “I think it may be helpful on the margin but ultimately what we need is new homebuyers to come into this market and buy up the inventory of homes.”

UPDATE: The New York Times thinks the new law is better than Santa Claus.