The "Loan Xperts" Blog

 Unintended Consequences of Florida Foreclosure Law

A new Florida law, the new F.S. 501.1377, which was approved by Charlie Crist On May 28, 2008, goes into effect on October 1, 2008. While it’s well intentioned and aimed at protecting homeowners in Florida who are facing foreclosure and being targeted by foreclosure “rescue” scam artists, the new law will effectively deny Florida homeowners legal representation in foreclosure cases.

The 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.” Unbelievably, attorneys are not excluded from the statute and as a result are prohibited from receiving payment for a bankruptcy filing or other foreclosure defense “before completing or performing all services”.

In other words, if I am interpreting the new law correctly, come October, attorneys in Florida will no longer be able to collect a retainer to assist Florida homeowners in defending a foreclosure action. It would also seem to prevent bankruptcy attorneys from collecting a fee in advance when assisting a homeowner in the throes of foreclosure with a bankruptcy filing.

So what should a homeowner do, if they find themselves in this situation and facing a possible foreclosure? The Better Business Bureau advises consumers who are at real risk of losing money, equity, their home or all three to carefully consider the following if their mortgage is in arrears or they are facing foreclosure:

• Talk to your lender - Ask about how to restructure your loan payment or refinance. Some foreclosure "rescuers" will offer to "negotiate" with your lender or lawyer. Know that such an offer is likely to involve a significant fee (no longer up-front). If you are hesitant to talk to your lender yourself, engage the assistance of a trusted family member.

• If that proves to be unfeasible, try selling the house * on your own to pay off the lender. Signing over a deed in no way releases you from your mortgage responsibilities!

• Some schemers will offer to complete paperwork for you, or ask you to sign a stack of documents, supposedly to secure a new mortgage. Victims have later learned that they signed a quit-claim deed to their home.

• Beware the personal approach. Some less-than-ethical businesses will stuff a handwritten note in your front door or mailbox that implies that "help" is available from someone you know or who has your interests in mind. Foreclosure scam artists know exactly what neighborhoods to blanket with their offers.

• You should never sign a contract under pressure and never sign away ownership of your property. Ask a trusted family member, your attorney or a financial professional to review any paperwork you may be asked to sign.

We have recently partnered with Save Our Home From Foreclosure, LLC, which is a service aimed at helping Florida home owners avoid foreclosure and mitigate the damage that usually results from going through this process. If we are unable to work with the home owner’s lender to modify the loan and keeping the home is no longer an affordable option, we will coordinate an effort to “short sell” the home to avoid the lasting scars caused by a foreclosure. We have relationships with Realtors who specialize in “Short Sales”, and understand the complexities and urgency of these transactions and aggressively market properties. There are no up-front fees for these services, as SOHFF is paid out of the proceeds of the sale by the lender and/or purchaser.

If you or someone you know is currently facing this issue, you are not alone, as millions of home owners are now finding themselves in the same position. We urge you however to be proactive to minimize the damage to your credit and avoid the hardship and embarrassment of foreclosure. Help is available at (727) 209-0372, or you may call our 24-hour toll free help line at (800) 652-5567 ext, 201 for more information.