Read the Florida AG suit for hints on what to watch out for and always contact your mortage lender if you find yourself in need of help.

Florida AG Attacks Rescue Foreclosure Scams
Posted on Wednesday, 23 of January , 2008 at 6:32 pm

TALLAHASSEE, FL – A multi-pronged initiative to combat mortgage-related fraud, specifically fraud involving “rescue foreclosure” scams is being led by the Florida Attorney General’s office.

As part of the litigation and legislation-based initiative, Attorney General Bill McCollum has filed a lawsuit asserting South Florida-based National Foreclosure Management and multiple affiliates defrauded at least 80 homeowners out of approximately $1.7 million in home equity. These allegations were investigated by a new task force developed by the Attorney General to target mortgage-related fraud, an effort bolstered by proposed legislation to strengthen provisions against mortgage rescue scams.

Beginning in October 2004, National Foreclosure Management, which now does business as American Home Rescue, Inc., selected homeowners who had substantial equity in their homes but were in the process of being foreclosed upon. The company would offer to hold the titles to the homes for a year, refinance the debt, and provide cash and credit repair counseling to the homeowner, all while allowing the homeowner to remain in the house. The company claimed it would deed the property back at the end of the year after the foreclosure had been avoided and the homeowner’s credit was repaired. Once the company had obtained the title to the house, the Attorney General’s lawsuit alleges the company would strip the equity from the homes by refinancing them at inflated prices and by assessing fraudulent fees and costs, leaving little or nothing for the homeowner to recoup. The home would then be sold outright to an investor or a straw buyer who would lease the home back to the homeowner at a rental rate far exceeding the original mortgage payment, virtually ensuring the homeowner’s eventual eviction. According to the lawsuit, the homeowners would end up with neither the titles to the homes nor the equity that rightfully belonged to them.

The lawsuit, filed with the Office of Financial Regulation, seeks restitution to the affected homeowners, dissolution of the rescue foreclosure companies, and revocation of the mortgage brokers’ licenses revoked.

The lawsuit is the first filed by the Attorney General’s Mortgage Fraud Task Force, created to investigate these various schemes and, where appropriate, seek solutions to protect consumers. The task force has been in operation since September and is comprised of 25 lawyers and investigators in the Attorney General’s Office, stationed in locations throughout the state. In addition to filing the lawsuit, the Attorney General announced the filing of the “Foreclosure Rescue Fraud Prevention Act,” sponsored by Sen. Mike Fasano (R—New Port Richey) and Rep. Clay Ford (R—Gulf Breeze). The proposed legislation will ensure that, among other things, homeowners are properly informed about their rights when they are signing a contract with a foreclosure rescue entity.

The proposed legislation offers the following key provisions:

– A five-day right of cancellation period that allows the consumer to cancel the agreement with the foreclosure rescuer;

– Requirements that foreclosure rescuers include in the contract clear and conspicuous notice to homeowners of this right of cancellation as well as a recommendation that the homeowner contact the lender or mortgage servicer prior to the signing of the agreement and a provision that states the consultant is prohibited from accepting any form of payment until all services are completed;

– Definitions of such terms as “Equity Purchaser,” “Foreclosure Consultant,” “Foreclosure-related Services,” and “Foreclosure Rescue Transaction”; and

– That all violations of this act are defined as an unfair and deceptive trade practices and are subject to the penalties included in Part II of Chapter 501, Florida Statutes.

The legislation is filed under Senate Bill 992 and House Bill 643.

Parties named in today’s lawsuit are National Foreclosure Management, Inc; American Home Rescue, Inc.; National Property Holding Group, LLC; The Mortgage Practice, Inc.; Southeast Capital Mortgage Company; Barrister Title Services, Inc.; GMC Land Services of Florida, Inc., doing business as Richmond Abstract, Inc.; Bernard Williams; Wyman F. Roberts; Lakeisha Marion; Anna Silva; Albert Nae; Linda Rubinchik; Rhona Oliver; Tracy Needleman; Gina Rock; John Sarlo, Dianna Brown-Flournoy; and Reina Roman.

A copy of the lawsuit against National Foreclosure Management is available here. 1-23-08