Volume 5 Number 4
January 25, 2008

CFO SINK JOINS AG McCOLLUM TO PROTECT HOMEOWNERS FROM MORTGAGE-RELATED FRAUD

On Tuesday, January 22, Florida Chief Financial Officer Alex Sink joined Attorney General Bill McCollum in announcing a lawsuit, legislation and a task forced aimed at protecting Floridians from mortgage-related fraud. The Foreclosure Rescue Fraud Prevention Act, sponsored by Senator Mike Fassano and Representative Clay Ford, will help to strengthen existing consumer protections by ensuring homeowners are properly informed about their rights when they are signing a contract with a foreclosure rescue entity.



See press release below:

McCOLLUM SUES "RESCUE FORECLOSURE" COMPANY, ANNOUNCES LEGISLATION TO FIGHT MORTGAGE-RELATED FRAUD
~ Attorney General, state leaders seek to protect homeowners from
deceptive practices
~

TALLAHASSEE, FL – Attorney General Bill McCollum today announced a multi-pronged initiative to combat mortgage-related fraud, specifically fraud involving “rescue foreclosure” scams. As part of the litigation and legislation-based initiative, the Attorney General today 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 Attorney General McCollum to target mortgage-related fraud, an effort bolstered by proposed legislation to strengthen provisions against mortgage rescue scams. The legislation, sponsored by Senator Mike Fasano and Representative Clay Ford, was unveiled this afternoon.

“The Attorney General’s Office is taking action against unscrupulous individuals who attempt to take advantage of our citizens when they are desperate to protect their homes,” said Attorney General McCollum. “We are tackling this growing problem from several directions to help keep families in the homes they’ve worked so hard to achieve.”

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. Don Saxon, Commissioner of the Office of Financial Regulation, expressed gratitude to Attorney General Bill McCollum and Chief Financial Officer Alex Sink for their continued support and commitment to protect consumers.

“Mortgage fraud is a destructive crime that can destroy a family’s future in an instant, and we need stronger laws to protect Florida’s consumers,” said Chief Financial Officer Sink, who oversees the Department of Financial Services and who heralded today’s actions as essential to the fight against mortgage-related fraud. “It is downright disgraceful that some would use trickery to steal the dream of homeownership from a struggling Floridian.”

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 today announced the filing of the “Foreclosure Rescue Fraud Prevention Act,”
sponsored by Senator Mike Fasano (R—New Port Richey) and Representative 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.

“When people are on the brink of losing their homes, they are desperate for any assistance available and all too often they trust a wolf in sheep’s clothing,” said Senator Fasano. “We must strive to protect Florida’s homeowners from such a dangerous situation.”

“This legislation is designed to protect homeowners from individuals who attempt to prey upon them in their time of distress,” said Representative Ford. “We must make every effort to shelter our citizens from this blatant form of deception.”

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.

Today’s 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 online at: http://myfloridalegal.com/webfiles.nsf/WF/MRAY-7B4NC7/$file/NationalForeclosureManagementComplaint.pdf