Foreclosure Rescue Scams Curbed By New Fraud Prevention Law

MIAMI – As an increasing number of homeowners face foreclosure troubles, unscrupulous firms and individuals are targeting them in what’s known as “foreclosure rescue” scams. However, a new Florida law went into effect this week that is designed to protect consumers from being cheated out of their homes. The Miami-Dade Consumer Services Department lists some of the commonly used fraud tactics and educates consumers on their rights.

Foreclosure rescue scam artists prey on homeowners who can’t afford their mortgage payments by offering to help for a fee. After they collect their money, they simply disappear without completing their services. In other cases, deceitful individuals offer to buy the homeowner’s house and lease it back to them until they are able to buy it back. This puts the homeowner at risk of being evicted and losing their home.

In response to such scams, Florida passed the Foreclosure Rescue Fraud Prevention Act of 2008, which went into effect October 1. This law grants borrowers a three-day grace period to back out of a loan if they sign an agreement with a foreclosure rescue consultant. Contracts must also include large, bold font print notification to homeowners of their right to cancel their contract and a disclosure statement that the consumer should contact his or her lender before signing because the lender may be willing to negotiate a payment plan free of charge. If a lease-type transaction takes place where the homeowner is remaining in the home and making payments to the new owner, the homeowner is afforded a 30-day right to cure any default of the terms of the repurchase agreement.

The Miami-Dade Consumer Services Department advises that if you are seeking foreclosure assistance, deal only with counselors who are certified by the federal Department of Housing and Urban Development (HUD). Otherwise, you cannot be sure the service provider is acting in your own best interest. Before enlisting foreclosure help, contact your mortgage company and try to negotiate a reduction in your payments. With the current financial turmoil, some mortgage companies are willing to do that.

For information about predatory lending and how to avoid it, visit the Miami-Dade Consumer Services website.

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