Law to Protect Homeowners Facing Foreclosures
Posted on November 7, 2008
Filed Under Foreclosures |
Homeowners facing the possibility of losing a home to foreclosure are being approached by individuals and companies offering to help rescue their homes from delinquency in return for a stake in the property. These schemes are being marketed as great home rescue options for homeowners who may have no other opportunity to remain in their homes. Many people have been taken for a ride by scam artists and find themselves still struggling to save their homes in the end.
In Florida, a law has now been passed to protect homeowners who may think these scams are good options to save their homes. The Foreclosure Fraud Protection Act went into effect October 1 and is designed not only to protect homeowners who do sign contracts with parties offering home foreclosure rescue services, but to educate Florida residents to the risks of such entering such contracts. It will also offer additional protection for homeowners who are facing foreclosure when they enter the contract.
The bill takes into account problems with a lot of contracts that are currently being offered to homeowners by entities offering home rescue type services. Many people have already been indicted and even convicted of fraudulently using these types of scams to make millions of dollars off desperate homeowners. The Foreclosure Fraud Protection Act takes into consideration some of the illegal loop holes that have been worked into the growing field of contracts from these companies in an attempt to protect homeowners and make them aware of their rights when they trust a third source to help them rescue their home.
One of the illegal features of many of these home rescue contracts is not allowing a provision for homeowners to cancel the deal and receive a refund. Some have nothing said at all about cancellation and others do not give a reasonable time frame or do not allow refunds of extremely high fees the homeowners pay up front. This new bill creates a legally binding three day “right of cancellation” policy where the homeowner must be guaranteed at least that time frame to back out of a deal. Also, the paperwork must include this information in big, bold letters so that homeowners can openly see from the beginning that they have the right to this three day cancellation period.
The law will also require these home rescue contracts to now include a recommendation that the homeowner contact their mortgage lender before they sign the contract. This could potentially lead people to learn of other options available from their lenders if they follow through and make this phone call. Further, these contracts must now inform the homeowner that it is illegal for the third party to receive any payment until the promised services have been delivered. Currently, many of these offers to save a home require up front fees which can be well over a thousand dollars, and then little to nothing is ever done to actually save the home.