1 | A bill to be entitled |
2 | An act relating to foreclosure fraud; amending s. |
3 | 501.2078, F.S.; providing legislative findings and intent |
4 | with respect to the need to protect homeowners who enter |
5 | into agreements designed to save their homes from |
6 | foreclosure; providing definitions; prohibiting a |
7 | foreclosure-rescue consultant from engaging in certain |
8 | acts or failing to perform contracted services; requiring |
9 | that all agreements for foreclosure-related rescue |
10 | services and foreclosure-rescue transactions be in |
11 | writing; specifying information that must be in the |
12 | written agreement; requiring that certain statements in |
13 | the written agreement be in uppercase letters and of a |
14 | specified size; providing that the homeowner has a right |
15 | to cancel the agreement for a specified period and the |
16 | right may not be waived; providing that the homeowner has |
17 | a specified period during which to cure a default under |
18 | certain circumstances; requiring equity purchasers to |
19 | assume or discharge certain liens; requiring that an |
20 | equity purchaser verify the homeowner's ability to make |
21 | payments under a repurchase agreement; providing price |
22 | limitations for repurchase transactions; providing for a |
23 | rebuttable presumption of certain transactions being |
24 | unconscionable under certain circumstances; providing for |
25 | limited application of the presumption; providing an |
26 | exclusion; providing that a foreclosure-rescue transaction |
27 | involving a lease option or other repurchase agreement |
28 | creates a rebuttable presumption that the transaction is a |
29 | loan transaction and the conveyance from the homeowner to |
30 | the equity purchaser is a mortgage; providing limited |
31 | application of the presumption; providing an exclusion; |
32 | providing that a person who violates certain provisions |
33 | commits an unfair and deceptive trade practice as defined |
34 | in part II of ch. 501, F.S.; providing penalties; |
35 | providing an effective date. |
36 |
|
37 | Be It Enacted by the Legislature of the State of Florida: |
38 |
|
39 | Section 1. Section 501.2078, Florida Statutes, is amended |
40 | to read: |
41 | (Substantial rewording of section. See |
42 | s. 501.2078, F.S., for current text.) |
43 | 501.2078 Violations involving homeowners during the course |
44 | of residential foreclosure proceedings.-- |
45 | (1) LEGISLATIVE FINDINGS AND INTENT.--The Legislature |
46 | finds that homeowners who are in default on their mortgages, in |
47 | foreclosure, or at risk of losing their homes due to nonpayment |
48 | of taxes may be vulnerable to fraud, deception, and unfair |
49 | dealings with foreclosure-rescue consultants or equity |
50 | purchasers. The intent of this section is to provide a homeowner |
51 | with information necessary to make an informed decision |
52 | regarding the sale or transfer of his or her home to an equity |
53 | purchaser. It is the further intent of this section to require |
54 | that foreclosure-related rescue services agreements be expressed |
55 | in writing in order to safeguard homeowners against deceit and |
56 | financial hardship; to ensure, foster, and encourage fair |
57 | dealing in the sale and purchase of homes in foreclosure or |
58 | default; to prohibit representations that tend to mislead; to |
59 | prohibit or restrict unfair contract terms; to provide a |
60 | cooling-off period for homeowners who enter into contracts for |
61 | services related to saving their homes from foreclosure or |
62 | preserving their rights to possession of their homes; to afford |
63 | homeowners a reasonable and meaningful opportunity to rescind |
64 | sales to equity purchasers; and to preserve and protect home |
65 | equity for the homeowners of this state. |
66 | (2) DEFINITIONS.--As used in this section, the term: |
67 | (a) "Equity purchaser" means any person who acquires a |
68 | legal, equitable, or beneficial ownership interest in any |
69 | residential real property as a result of a foreclosure-rescue |
70 | transaction. The term does not apply to a person who acquires |
71 | the legal, equitable, or beneficial interest in such property: |
72 | 1. By a certificate of title from a foreclosure sale |
73 | conducted under chapter 45; |
74 | 2. At a sale of property authorized by statute; |
75 | 3. By order or judgment of any court; |
76 | 4. From a spouse, parent, grandparent, child, grandchild, |
77 | or sibling of the person or the person's spouse; or |
78 | 5. As a deed in lieu of foreclosure, a workout agreement, |
79 | a bankruptcy plan, or any other agreement between a foreclosing |
80 | lender and a homeowner. |
81 | (b) "Foreclosure-rescue consultant" means a person who |
82 | directly or indirectly makes a solicitation, representation, or |
83 | offer to a homeowner to provide or perform, in return for |
84 | payment of money or other valuable consideration, foreclosure- |
85 | related rescue services. The term does not apply to: |
86 | 1. A person excluded under s. 501.212. |
87 | 2. A person acting under the express authority or written |
88 | approval of the United States Department of Housing and Urban |
89 | Development or other department or agency of the United States |
90 | or this state to provide foreclosure-related rescue services. |
91 | 3. A charitable, not-for-profit agency or organization, as |
92 | determined by the United States Internal Revenue Service under |
93 | s. 501(c)(3) of the Internal Revenue Code, that offers |
94 | counseling or advice to an owner of residential real property in |
95 | foreclosure or loan default if the agency or organization does |
96 | not contract for foreclosure-related rescue services with a for- |
97 | profit lender or person facilitating or engaging in foreclosure- |
98 | rescue transactions. |
99 | 4. A person who holds or is owed an obligation secured by |
100 | a lien on any residential real property in foreclosure if the |
101 | person performs foreclosure-related rescue services in |
102 | connection with this obligation or lien and the obligation or |
103 | lien was not the result of or part of a proposed foreclosure |
104 | reconveyance or foreclosure-rescue transaction. |
105 | 5. A financial institution as defined in s. 655.005 and |
106 | any parent or subsidiary of the financial institution or of the |
107 | parent or subsidiary. |
108 | 6. A licensed mortgage broker, mortgage lender, or |
109 | correspondent mortgage lender that provides mortgage counseling |
110 | or advice regarding residential real property in foreclosure, |
111 | which counseling or advice is within the scope of services set |
112 | forth in chapter 494 and is provided without payment of money or |
113 | other consideration other than a mortgage brokerage fee as |
114 | defined in s. 494.001. |
115 | (c) "Foreclosure-related rescue services" means any good |
116 | or service related to, or promising assistance in connection |
117 | with: |
118 | 1. Stopping, avoiding, or delaying foreclosure proceedings |
119 | concerning residential real property; or |
120 | 2. Curing or otherwise addressing a default or failure to |
121 | timely pay with respect to a residential mortgage loan |
122 | obligation. |
123 | (d) "Foreclosure-rescue transaction" means a transaction: |
124 | 1. By which residential real property in foreclosure is |
125 | conveyed to an equity purchaser and the homeowner maintains a |
126 | legal or equitable interest in the residential real property |
127 | conveyed, including, without limitation, a lease option |
128 | interest, an option to acquire the property, an interest as |
129 | beneficiary or trustee to a land trust, or other interest in the |
130 | property conveyed; and |
131 | 2. That is designed or intended by the parties to stop, |
132 | avoid, or delay foreclosure proceedings against a homeowner's |
133 | residential real property. |
134 | (e) "Homeowner" means any record title owner of |
135 | residential real property that is the subject of foreclosure |
136 | proceedings. |
137 | (f) "Residential real property" means real property |
138 | consisting of one-family to four-family dwelling units, one of |
139 | which is occupied by the owner as his or her principal place of |
140 | residence. |
141 | (g) "Residential real property in foreclosure" means |
142 | residential real property against which there is an outstanding |
143 | notice of the pendency of foreclosure proceedings recorded |
144 | pursuant to s. 48.23. |
145 | (3) PROHIBITED ACTS.--In the course of offering or |
146 | providing foreclosure-related rescue services, a foreclosure- |
147 | rescue consultant may not: |
148 | (a) Engage in or initiate foreclosure-related rescue |
149 | services without first executing a written agreement with the |
150 | homeowner for foreclosure-related rescue services; or |
151 | (b) Solicit, charge, receive, or attempt to collect or |
152 | secure payment, directly or indirectly, for foreclosure-related |
153 | rescue services before completing or performing all services |
154 | contained in the agreement for foreclosure-related rescue |
155 | services. |
156 | (4) FORECLOSURE-RELATED RESCUE SERVICES; WRITTEN |
157 | AGREEMENT.-- |
158 | (a) The written agreement for foreclosure-related rescue |
159 | services must be printed in at least 12-point uppercase type and |
160 | signed by both parties. The agreement must include the name and |
161 | address of the person providing foreclosure-related rescue |
162 | services, the exact nature and specific detail of each service |
163 | to be provided, the total amount and terms of charges to be paid |
164 | by the homeowner for the services, and the date of the |
165 | agreement. The date of the agreement may not be earlier than the |
166 | date the homeowner signed the agreement. The foreclosure-rescue |
167 | consultant must give the homeowner a copy of the agreement to |
168 | review not less than 1 business day before the homeowner is to |
169 | sign the agreement. |
170 | (b) The homeowner has the right to cancel the written |
171 | agreement without any penalty or obligation if the homeowner |
172 | cancels the agreement within 3 business days after signing the |
173 | written agreement. The right to cancel may not be waived by the |
174 | homeowner or limited in any manner by the foreclosure-rescue |
175 | consultant. If the homeowner cancels the agreement, any payments |
176 | that have been given to the foreclosure-rescue consultant must |
177 | be returned to the homeowner within 10 business days after |
178 | receipt of the notice of cancellation. |
179 | (c) An agreement for foreclosure-related rescue services |
180 | must contain, immediately above the signature line, a statement |
181 | in at least 12-point uppercase type that substantially complies |
182 | with the following: |
183 | |
184 | HOMEOWNER'S RIGHT OF CANCELLATION |
185 | |
186 | YOU MAY CANCEL THIS AGREEMENT FOR FORECLOSURE-RELATED |
187 | RESCUE SERVICES WITHOUT ANY PENALTY OR OBLIGATION WITHIN 3 |
188 | BUSINESS DAYS FOLLOWING THE DATE THIS AGREEMENT IS SIGNED BY |
189 | YOU. |
190 |
|
191 | THE FORECLOSURE-RESCUE CONSULTANT IS PROHIBITED BY LAW FROM |
192 | ACCEPTING ANY MONEY, PROPERTY, OR OTHER FORM OF PAYMENT FROM YOU |
193 | UNTIL ALL PROMISED SERVICES ARE COMPLETE. IF FOR ANY REASON YOU |
194 | HAVE PAID THE CONSULTANT BEFORE CANCELLATION, YOUR PAYMENT MUST |
195 | BE RETURNED TO YOU NO LATER THAN 10 BUSINESS DAYS AFTER THE |
196 | CONSULTANT RECEIVES YOUR CANCELLATION NOTICE. |
197 |
|
198 | TO CANCEL THIS AGREEMENT, A SIGNED AND DATED COPY OF A |
199 | STATEMENT THAT YOU ARE CANCELLING THE AGREEMENT SHOULD BE MAILED |
200 | (POSTMARKED) OR DELIVERED TO ________________ (NAME) AT |
201 | _______________(ADDRESS) NO LATER THAN MIDNIGHT OF |
202 | ___________(DATE). |
203 |
|
204 | IMPORTANT: IT IS RECOMMENDED THAT YOU CONTACT YOUR LENDER |
205 | OR MORTGAGE SERVICER BEFORE SIGNING THIS AGREEMENT. YOUR LENDER |
206 | OR MORTGAGE SERVICER MAY BE WILLING TO NEGOTIATE A PAYMENT PLAN |
207 | OR A RESTRUCTURING WITH YOU FREE OF CHARGE. |
208 |
|
209 | (d) The inclusion of the statement does not prohibit the |
210 | foreclosure-rescue consultant from giving the homeowner more |
211 | time in which to cancel the agreement than is set forth in the |
212 | statement, provided all other requirements of this subsection |
213 | are met. |
214 | (e) The foreclosure-rescue consultant must give the |
215 | homeowner a copy of the signed agreement within 1 business day |
216 | after the homeowner signs the agreement. |
217 | (5) FORECLOSURE-RESCUE TRANSACTIONS; WRITTEN AGREEMENT.-- |
218 | (a)1. A foreclosure-rescue transaction must include a |
219 | written agreement prepared in at least 12-point uppercase type |
220 | that is completed, signed, and dated by the homeowner and the |
221 | equity purchaser before executing any instrument from the |
222 | homeowner to the equity purchaser quitclaiming, assigning, |
223 | transferring, conveying, or encumbering an interest in the |
224 | residential real property in foreclosure. The equity purchaser |
225 | must give the homeowner a copy of the completed agreement within |
226 | 1 business day after the homeowner signs the agreement. The |
227 | agreement must contain the entire understanding of the parties |
228 | and must include: |
229 | a. The name, business address, and telephone number of the |
230 | equity purchaser. |
231 | b. The street address and full legal description of the |
232 | property. |
233 | c. Clear and conspicuous disclosure of any financial or |
234 | legal obligations of the homeowner that will be assumed by the |
235 | equity purchaser. |
236 | d. The total consideration to be paid by the equity |
237 | purchaser in connection with or incident to the acquisition of |
238 | the property by the equity purchaser. |
239 | e. The terms of payment or other consideration, including, |
240 | but not limited to, any services that the equity purchaser |
241 | represents will be performed for the homeowner before or after |
242 | the sale. |
243 | f. The date and time when possession of the property is to |
244 | be transferred to the equity purchaser. |
245 | 2. A foreclosure-rescue transaction agreement must |
246 | contain, above the signature line, a statement in at least 12- |
247 | point uppercase type that substantially complies with the |
248 | following: |
249 |
|
250 | I UNDERSTAND THAT UNDER THIS AGREEMENT I AM SELLING MY HOME |
251 | TO THE OTHER UNDERSIGNED PARTY. |
252 |
|
253 | 3. A foreclosure-rescue transaction agreement must state |
254 | the specifications of any option or right to repurchase the |
255 | residential real property in foreclosure, including the specific |
256 | amounts of any escrow payments or deposit, down payment, |
257 | purchase price, closing costs, commissions, or other fees or |
258 | costs. |
259 | 4. A foreclosure-rescue transaction agreement must comply |
260 | with all applicable provisions of 15 U.S.C. ss. 1600 et seq. and |
261 | related regulations. |
262 | (b) The homeowner may cancel the foreclosure-rescue |
263 | transaction agreement without penalty if the homeowner notifies |
264 | the equity purchaser of such cancellation no later than 5:00 |
265 | p.m. on the 3rd business day after signing the written |
266 | agreement. Any moneys paid by the equity purchaser to the |
267 | homeowner or by the homeowner to the equity purchaser must be |
268 | returned at cancellation. The right to cancel does not limit or |
269 | otherwise affect the homeowner's right to cancel the transaction |
270 | under any other law. The right to cancel may not be waived by |
271 | the homeowner or limited in any way by the equity purchaser. The |
272 | equity purchaser must give the homeowner, at the time the |
273 | written agreement is signed, a notice of the homeowner's right |
274 | to cancel the foreclosure-rescue transaction as set forth in |
275 | this subsection. The notice, which must be set forth on a |
276 | separate cover sheet to the written agreement that contains no |
277 | other written or pictorial material, must be in at least 12- |
278 | point uppercase type, double-spaced, and read as follows: |
279 |
|
280 | NOTICE TO THE HOMEOWNER/SELLER |
281 | |
282 | PLEASE READ THIS FORM COMPLETELY AND CAREFULLY. IT CONTAINS |
283 | VALUABLE INFORMATION REGARDING CANCELLATION RIGHTS. |
284 |
|
285 | BY THIS CONTRACT, YOU ARE AGREEING TO SELL YOUR HOME. YOU |
286 | MAY CANCEL THIS TRANSACTION AT ANY TIME BEFORE 5:00 P.M. OF THE |
287 | THIRD BUSINESS DAY FOLLOWING RECEIPT OF THIS NOTICE. |
288 |
|
289 | THIS CANCELLATION RIGHT MAY NOT BE WAIVED IN ANY MANNER BY |
290 | YOU OR BY THE PURCHASER. |
291 |
|
292 | ANY MONEY PAID DIRECTLY TO YOU BY THE PURCHASER MUST BE |
293 | RETURNED TO THE PURCHASER AT CANCELLATION. ANY MONEY PAID BY YOU |
294 | TO THE PURCHASER MUST BE RETURNED TO YOU AT CANCELLATION. |
295 |
|
296 | TO CANCEL, SIGN THIS FORM AND RETURN IT TO THE PURCHASER BY |
297 | 5:00 P.M. ON ___________(DATE) AT ________________________ |
298 | (ADDRESS) . IT IS BEST TO MAIL IT BY CERTIFIED MAIL OR OVERNIGHT |
299 | DELIVERY, RETURN RECEIPT REQUESTED, AND TO KEEP A PHOTOCOPY OF |
300 | THE SIGNED FORM AND YOUR POST OFFICE RECEIPT. |
301 |
|
302 | I (we) hereby cancel this transaction. |
303 | Seller's Signature Printed Name of Seller Seller's Signature Printed Name of Seller |
304 | Printed Name of Seller Seller's Signature Printed Name of Seller Date (c) In |
305 | Seller's Signature Printed Name of Seller Date (c) In any foreclosure-res |
306 | Printed Name of Seller Date (c) In any foreclosure-rescue transaction in which |
307 | Date (c) In any foreclosure-rescue transaction in which the h |
308 |
|
309 | (c) In any foreclosure-rescue transaction in which the |
310 | homeowner is provided the right to repurchase the residential |
311 | real property, the homeowner has a 30-day right to cure any |
312 | default of the terms of the contract with the equity purchaser, |
313 | and this right to cure may be exercised on up to three separate |
314 | occasions. The homeowner's right to cure must be included in any |
315 | written agreement required by this subsection. |
316 | (d) In any foreclosure-rescue transaction, before or at |
317 | the time of conveyance, the equity purchaser must fully assume |
318 | or discharge any lien in foreclosure as well as any prior liens |
319 | that will not be extinguished by the foreclosure. |
320 | (e) If the homeowner has the right to repurchase the |
321 | residential real property, the equity purchaser must verify and |
322 | be able to demonstrate that the homeowner has or will have a |
323 | reasonable ability to make the required payments to exercise the |
324 | option to repurchase under the written agreement. For purposes |
325 | of this subsection, there is a rebuttable presumption that the |
326 | homeowner has a reasonable ability to make the payments required |
327 | to repurchase the property if the homeowner's monthly payments |
328 | for primary housing expenses and regular monthly principal and |
329 | interest payments on other personal debt do not exceed 60 |
330 | percent of the homeowner's monthly gross income. |
331 | (f) If the homeowner has the right to repurchase the |
332 | residential real property, the price the homeowner pays may not |
333 | be unconscionable, unfair, or commercially unreasonable. A |
334 | rebuttable presumption, solely between the equity purchaser and |
335 | the homeowner, arises that the foreclosure-rescue transaction |
336 | was unconscionable if the homeowner's repurchase price is |
337 | greater than 17 percent per annum more than the total amount |
338 | paid by the equity purchaser to acquire, improve, maintain, and |
339 | hold the property. Unless the repurchase agreement or a |
340 | memorandum of the repurchase agreement is recorded in accordance |
341 | with s. 695.01, the presumption arising under this subsection |
342 | shall not apply against creditors or subsequent purchasers for a |
343 | valuable consideration and without notice. |
344 | (6) REBUTTABLE PRESUMPTION.--Any foreclosure-rescue |
345 | transaction involving a lease option or other repurchase |
346 | agreement creates a rebuttable presumption, solely between the |
347 | equity purchaser and the homeowner, that the transaction is a |
348 | loan transaction and the conveyance from the homeowner to the |
349 | equity purchaser is a mortgage under s. 697.01. Unless the lease |
350 | option or other repurchase agreement, or a memorandum of the |
351 | lease option or other repurchase agreement, is recorded in |
352 | accordance with s. 695.01, the presumption created under this |
353 | subsection shall not apply against creditors or subsequent |
354 | purchasers for a valuable consideration and without notice. |
355 | (7) VIOLATIONS.--A person who violates any provision of |
356 | this section commits an unfair and deceptive trade practice as |
357 | defined in part II of this chapter. Violators are subject to the |
358 | penalties and remedies provided in part II of this chapter, |
359 | including a monetary penalty not to exceed $15,000 per |
360 | violation. |
361 | Section 2. This act shall take effect October 1, 2008. |