To protect homeowners in financial difficulty from losing their homes to foreclosure rescue scams, the Florida legislature enacted the Foreclosure Rescue Fraud Prevention Act. This law imposes tight restrictions on anyone offering services purporting to help you save your residential property from foreclosure.
(To learn more about foreclosure procedures in Florida, visit our Florida Foreclosure Law Center.)
What Is Foreclosure Rescue?
Foreclosure rescue services include any goods or services related to, or promising to assist you, with:
- stopping, avoiding, or delaying foreclosure proceedings on residential real property, or
- curing, or otherwise dealing with a default or failure to timely pay a residential real property mortgage obligation.
A foreclosure rescue transaction includes any transaction:
- where you transfer your ownership interest in residential real property in foreclosure to a third party while retaining an interest in the property, such as a lease-option, an option to repurchase the property, or an interest as a beneficiary or a trustee under a land trust, and
- which is designed or intended to stop, avoid or delay foreclosure proceedings.
Not included. A foreclosure rescue transaction does not include transfers resulting from:
- certificates of title issued after a foreclosure sale
- sales authorized by state statute
- judicial sales or court orders
- transactions between family members, or
- agreements between you and a foreclosing lender.
In recent years, foreclosure rescue scams have flourished. To learn more about common foreclosure rescue scams, and how to avoid them, visit out Foreclosure Rescue Scams topic area.
People and Businesses That Must Comply With the Law
The law applies to any person or business that solicits, represents, or offers to provide you with foreclosure rescue services or engage in a foreclosure rescue transaction in Florida in exchange for money or other valuable consideration, unless they are specifically excluded under the law.
Not included. The following persons and businesses are excluded from coverage under the Florida Foreclosure Rescue Fraud Prevention Act:
- anyone acting with written approval or express authority of the U. S. Department of Housing and Urban Development (HUD) or federal or state agencies
- non-profit organizations offering counseling, provided that they do not contract with a for-profit lender or person engaging in foreclosure rescue transactions
- lienholders negotiating a resolution of a foreclosure provided they did not obtain their lien as a result of a foreclosure rescue transaction
- licensed mortgage brokers or lenders providing advice in connection with a mortgage transaction without payment other than a loan origination fee
- Florida licensed attorneys representing you as a client
- financial institutions governed by other state laws and their parent and subsidiary corporations
- licensed real estate professionals engaging in conventional sales, leasing, renting and appraisal transactions, and
- licensed persons or entities engaged in insurance and banking services regulated by the Florida Department of Financial Services, federal banking authorities, the Florida Financial Services Commission and the Florida Public Service Commission.
Who Is Protected?
The law protects you if you own residential real property from a one family home up to a four-family dwelling. This includes single family homes, townhouses, condominiums, duplexes, triplexes, and fourplexes.
Written Agreement Required
Agreements for foreclosure rescue services must be in writing and signed by both parties. The agreement must include:
- the name and address of the person providing the service
- the exact nature and specific detail of the service to be provided
- the total amount to be paid for the services and the payment terms
- the date of the agreement (which cannot be prior to the date the agreement is signed)
- notice of your right to cancel, the prohibition on fee collection prior to full performance of all services, the instructions for cancelling and a recommendation that you contact your lender or mortgage servicer to attempt to negotiate a resolution before you sign the foreclosure rescue contract
- the name address and telephone number of the purchaser of your property under the foreclosure rescue plan
- the street address and full legal description of your property
- clear and conspicuous disclosure of any financial obligations that the purchaser will be assuming
- the total amount that the purchaser will be paying to acquire the property, including any amounts to be paid to your lender or third parties
- the terms of the payment by the purchaser and a description of the services that will be provided to you before and after the sale of the property
- the date and time of the transfer, and
- a statement in at least 12-point uppercase type above the signature line whereby you acknowledge that you understand that you are selling your home to the other party.
You must be provided with an exact copy of the fully executed (signed by both parties) contract within three hours of the time you signed it.
Your Right to Cancel
You have the right to cancel an agreement for foreclosure rescue services without penalty or obligation within three business days from the date you signed the agreement. The right to cancel cannot be waived or limited in any way and, if you cancel, any money you paid must be refunded to you within ten business days of the receipt of the cancellation.
Reasonable Repurchase Price and Your Ability to Repurchase
If the agreement gives you the right to repurchase the property, the repurchase price must be reasonable and the purchaser must verify and demonstrate that you have the reasonable ability to make any required payments and pay the repurchase price.
Generally, this means the purchaser will need to show that your monthly payments for housing expenses and other debt do not exceed 60% of your monthly income before taxes, and that the repurchase price is not more than the amount the purchaser paid to acquire and maintain the property plus seventeen percent per year.
Your Right to Reinstate After Default
If you default under the foreclosure rescue agreement, you have thirty days to cure the default and reinstate the agreement, and you can exercise this right up to three times during the term of the agreement.
Purchaser Must Assume or Discharge Liens
At the sale, the purchaser is required by law to assume or satisfy (pay) the lien that is the subject of the foreclosure as well as any other liens that would not be extinguished by the foreclosure.
No Fee Until All Services Are Performed
Under the law, you cannot be charged a fee, nor can the foreclosure rescuer solicit, receive, attempt to collect or secure payment in any way before completing or performing all services set forth in the written agreement.
Any violation of the Foreclosure Rescue Fraud Prevention Act is an unfair and deceptive trade practice under Florida law. Violators are subject to penalties and remedies including a monetary penalty of up to $15,000 per violation.