On the heels of Florida’s “robo-signing” scandal, the state’s Attorney General, Pam Bondi, has filed suit against several foreclosure assistance companies in our area. These companies are alleged to have misrepresented themselves to Florida homeowners in need of foreclosure assistance by promising loan modifications or mitigations for a fee and then failing to follow through. With the recent onslaught of predatory foreclosure practices, the Attorney General’s office is on high alert and is working to prevent further cases of foreclosure-related fraud.
The state of Florida has been heavily affected by the economic recession suffered by the nation, and has been one of the states most heavily hit by foreclosures. Though these circumstances have been a boon for Florida real estate investors, they have also led to more stringent legislation protecting homeowners in foreclosure proceedings. Many of these regulations have been imposed by the state with the primary objective being to protect consumers upside-down on their mortgages.
It is important to understand the laws in place to protect homeowners nearing foreclosure in the state of Florida. Real estate investors are prohibited from charging upfront fees for any services rendered in the case of a proposed rescue or recovery. Also, beginning in 2010, the state of Florida requires that individuals or companies providing loan modification services be licensed through the Florida Office of F inancial Regulation. This provision works in tandem with other Foreclosure Rescue Fraud Prevention Act requirements.
In the cases of two Palm Beach real estate investment companies – MGD Management, LLC and CRS Marketing, LLC, Bondi’s office has obtained injunctions freezing assets of each company, as well as prohibiting marketing, advertising, or rendering of any foreclosure-related services until the court makes its final decision. Bondi has her sights on several other South Florida “Foreclosure Assistance” companies and plans to move forward with more indictments.
The named companies are alleged to have promised foreclosure assistance to homeowners in default for an upfront fee. In the state of Florida, charging a fee upfront for rescue or recovery services with regards to foreclosure assistance is illegal. After paying the fee, in some cases upwards of $2,000, homeowners were then advised to ignore nearly all communications with, and cease payments to, mortgage lenders- in essence accelerating the foreclosure of their home. Homeowners did so in good faith, believing that each company was assisting them by acting as a liaison with the mortgage lender or bank. However, the companies supposedly made no effort to communicate with the lenders, another violation of the Foreclosure Fraud Prevention Act. If convicted, each company could face a mountain of fees, from client restitution and the state’s attorney costs to a hefty $15,000 fine for each instance of fraud.
Due to the tremendous volume of foreclosures in the state, the Attorney General’s office has been waging a war against those preying on desperate homeowners. Attorney General Pam Bondi says, “Consumers should never fall for any representation that the Attorney General’s Office partners with private companies to obtain consumer refunds or that our office charges consumers any fees.” Her lawsuit against these companies serves as a warning for others attempting to coerce desperate homeowners into illegitimate deals. This should also serve as a warning to any Florida Investors attempting a legitimate foreclosure rescue. Just remember to be careful in all aspects of your real estate business, and to be especially mindful of the newly imposed and strictly enforced foreclosure rescue codes.