| 1 | A bill to be entitled |
| 2 | An act relating to foreclosure fraud; creating s. |
| 3 | 501.1377, 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 | repealing s. 501.2078, F.S., relating to violations |
| 36 | involving individual homeowners during the course of |
| 37 | residential foreclosure proceedings; providing an |
| 38 | effective date. |
| 39 |
|
| 40 | Be It Enacted by the Legislature of the State of Florida: |
| 41 |
|
| 42 | Section 1. Section 501.1377, Florida Statutes, is created |
| 43 | to read: |
| 44 | 501.1377 Violations involving homeowners during the course |
| 45 | of residential foreclosure proceedings.-- |
| 46 | (1) LEGISLATIVE FINDINGS AND INTENT.--The Legislature |
| 47 | finds that homeowners who are in default on their mortgages, in |
| 48 | foreclosure, or at risk of losing their homes due to nonpayment |
| 49 | of taxes may be vulnerable to fraud, deception, and unfair |
| 50 | dealings with foreclosure-rescue consultants or equity |
| 51 | purchasers. The intent of this section is to provide a homeowner |
| 52 | with information necessary to make an informed decision |
| 53 | regarding the sale or transfer of his or her home to an equity |
| 54 | purchaser. It is the further intent of this section to require |
| 55 | that foreclosure-related rescue services agreements be expressed |
| 56 | in writing in order to safeguard homeowners against deceit and |
| 57 | financial hardship; to ensure, foster, and encourage fair |
| 58 | dealing in the sale and purchase of homes in foreclosure or |
| 59 | default; to prohibit representations that tend to mislead; to |
| 60 | prohibit or restrict unfair contract terms; to provide a |
| 61 | cooling-off period for homeowners who enter into contracts for |
| 62 | services related to saving their homes from foreclosure or |
| 63 | preserving their rights to possession of their homes; to afford |
| 64 | homeowners a reasonable and meaningful opportunity to rescind |
| 65 | sales to equity purchasers; and to preserve and protect home |
| 66 | equity for the homeowners of this state. |
| 67 | (2) DEFINITIONS.--As used in this section, the term: |
| 68 | (a) "Equity purchaser" means any person who acquires a |
| 69 | legal, equitable, or beneficial ownership interest in any |
| 70 | residential real property as a result of a foreclosure-rescue |
| 71 | transaction. The term does not apply to a person who acquires |
| 72 | the legal, equitable, or beneficial interest in such property: |
| 73 | 1. By a certificate of title from a foreclosure sale |
| 74 | conducted under chapter 45; |
| 75 | 2. At a sale of property authorized by statute; |
| 76 | 3. By order or judgment of any court; |
| 77 | 4. From a spouse, parent, grandparent, child, grandchild, |
| 78 | or sibling of the person or the person's spouse; or |
| 79 | 5. As a deed in lieu of foreclosure, a workout agreement, |
| 80 | a bankruptcy plan, or any other agreement between a foreclosing |
| 81 | lender and a homeowner. |
| 82 | (b) "Foreclosure-rescue consultant" means a person who |
| 83 | directly or indirectly makes a solicitation, representation, or |
| 84 | offer to a homeowner to provide or perform, in return for |
| 85 | payment of money or other valuable consideration, foreclosure- |
| 86 | related rescue services. The term does not apply to: |
| 87 | 1. A person excluded under s. 501.212. |
| 88 | 2. A person acting under the express authority or written |
| 89 | approval of the United States Department of Housing and Urban |
| 90 | Development or other department or agency of the United States |
| 91 | or this state to provide foreclosure-related rescue services. |
| 92 | 3. A charitable, not-for-profit agency or organization, as |
| 93 | determined by the United States Internal Revenue Service under |
| 94 | s. 501(c)(3) of the Internal Revenue Code, which offers |
| 95 | counseling or advice to an owner of residential real property in |
| 96 | foreclosure or loan default if the agency or organization does |
| 97 | not contract for foreclosure-related rescue services with a for- |
| 98 | profit lender or person facilitating or engaging in foreclosure- |
| 99 | rescue transactions. |
| 100 | 4. A person who holds or is owed an obligation secured by |
| 101 | a lien on any residential real property in foreclosure if the |
| 102 | person performs foreclosure-related rescue services in |
| 103 | connection with this obligation or lien and the obligation or |
| 104 | lien was not the result of or part of a proposed foreclosure |
| 105 | reconveyance or foreclosure-rescue transaction. |
| 106 | 5. A financial institution as defined in s. 655.005 and |
| 107 | any parent or subsidiary of the financial institution or of the |
| 108 | parent or subsidiary. |
| 109 | 6. A licensed mortgage broker, mortgage lender, or |
| 110 | correspondent mortgage lender that provides mortgage counseling |
| 111 | or advice regarding residential real property in foreclosure, |
| 112 | which counseling or advice is within the scope of services set |
| 113 | forth in chapter 494 and is provided without payment of money or |
| 114 | other consideration other than a mortgage brokerage fee as |
| 115 | defined in s. 494.001. |
| 116 | (c) "Foreclosure-related rescue services" means any good |
| 117 | or service related to, or promising assistance in connection |
| 118 | with: |
| 119 | 1. Stopping, avoiding, or delaying foreclosure proceedings |
| 120 | concerning residential real property; or |
| 121 | 2. Curing or otherwise addressing a default or failure to |
| 122 | timely pay with respect to a residential mortgage loan |
| 123 | obligation. |
| 124 | (d) "Foreclosure-rescue transaction" means a transaction: |
| 125 | 1. By which residential real property in foreclosure is |
| 126 | conveyed to an equity purchaser and the homeowner maintains a |
| 127 | legal or equitable interest in the residential real property |
| 128 | conveyed, including, without limitation, a lease option |
| 129 | interest, an option to acquire the property, an interest as |
| 130 | beneficiary or trustee to a land trust, or other interest in the |
| 131 | property conveyed; and |
| 132 | 2. That is designed or intended by the parties to stop, |
| 133 | avoid, or delay foreclosure proceedings against a homeowner's |
| 134 | residential real property. |
| 135 | (e) "Homeowner" means any record title owner of |
| 136 | residential real property that is the subject of foreclosure |
| 137 | proceedings. |
| 138 | (f) "Residential real property" means real property |
| 139 | consisting of one-family to four-family dwelling units, one of |
| 140 | which is occupied by the owner as his or her principal place of |
| 141 | residence. |
| 142 | (g) "Residential real property in foreclosure" means |
| 143 | residential real property against which there is an outstanding |
| 144 | notice of the pendency of foreclosure proceedings recorded |
| 145 | pursuant to s. 48.23. |
| 146 | (3) PROHIBITED ACTS.--In the course of offering or |
| 147 | providing foreclosure-related rescue services, a foreclosure- |
| 148 | rescue consultant may not: |
| 149 | (a) Engage in or initiate foreclosure-related rescue |
| 150 | services without first executing a written agreement with the |
| 151 | homeowner for foreclosure-related rescue services; or |
| 152 | (b) Solicit, charge, receive, or attempt to collect or |
| 153 | secure payment, directly or indirectly, for foreclosure-related |
| 154 | rescue services before completing or performing all services |
| 155 | contained in the agreement for foreclosure-related rescue |
| 156 | services. |
| 157 | (4) FORECLOSURE-RELATED RESCUE SERVICES; WRITTEN |
| 158 | AGREEMENT.-- |
| 159 | (a) The written agreement for foreclosure-related rescue |
| 160 | services must be printed in at least 12-point uppercase type and |
| 161 | signed by both parties. The agreement must include the name and |
| 162 | address of the person providing foreclosure-related rescue |
| 163 | services, the exact nature and specific detail of each service |
| 164 | to be provided, the total amount and terms of charges to be paid |
| 165 | by the homeowner for the services, and the date of the |
| 166 | agreement. The date of the agreement may not be earlier than the |
| 167 | date the homeowner signed the agreement. The foreclosure-rescue |
| 168 | consultant must give the homeowner a copy of the agreement to |
| 169 | review not less than 1 business day before the homeowner is to |
| 170 | sign the agreement. |
| 171 | (b) The homeowner has the right to cancel the written |
| 172 | agreement without any penalty or obligation if the homeowner |
| 173 | cancels the agreement within 3 business days after signing the |
| 174 | written agreement. The right to cancel may not be waived by the |
| 175 | homeowner or limited in any manner by the foreclosure-rescue |
| 176 | consultant. If the homeowner cancels the agreement, any payments |
| 177 | that have been given to the foreclosure-rescue consultant must |
| 178 | be returned to the homeowner within 10 business days after |
| 179 | receipt of the notice of cancellation. |
| 180 | (c) An agreement for foreclosure-related rescue services |
| 181 | must contain, immediately above the signature line, a statement |
| 182 | in at least 12-point uppercase type that substantially complies |
| 183 | with the following: |
| 184 | |
| 185 | HOMEOWNER'S RIGHT OF CANCELLATION |
| 186 | |
| 187 | YOU MAY CANCEL THIS AGREEMENT FOR FORECLOSURE-RELATED |
| 188 | RESCUE SERVICES WITHOUT ANY PENALTY OR OBLIGATION WITHIN 3 |
| 189 | BUSINESS DAYS FOLLOWING THE DATE THIS AGREEMENT IS SIGNED BY |
| 190 | YOU. |
| 191 |
|
| 192 | THE FORECLOSURE-RESCUE CONSULTANT IS PROHIBITED BY LAW FROM |
| 193 | ACCEPTING ANY MONEY, PROPERTY, OR OTHER FORM OF PAYMENT FROM YOU |
| 194 | UNTIL ALL PROMISED SERVICES ARE COMPLETE. IF FOR ANY REASON YOU |
| 195 | HAVE PAID THE CONSULTANT BEFORE CANCELLATION, YOUR PAYMENT MUST |
| 196 | BE RETURNED TO YOU NO LATER THAN 10 BUSINESS DAYS AFTER THE |
| 197 | CONSULTANT RECEIVES YOUR CANCELLATION NOTICE. |
| 198 |
|
| 199 | TO CANCEL THIS AGREEMENT, A SIGNED AND DATED COPY OF A |
| 200 | STATEMENT THAT YOU ARE CANCELLING THE AGREEMENT SHOULD BE MAILED |
| 201 | (POSTMARKED) OR DELIVERED TO ________________ (NAME) AT |
| 202 | _______________(ADDRESS) NO LATER THAN MIDNIGHT OF |
| 203 | ___________(DATE). |
| 204 |
|
| 205 | IMPORTANT: IT IS RECOMMENDED THAT YOU CONTACT YOUR LENDER |
| 206 | OR MORTGAGE SERVICER BEFORE SIGNING THIS AGREEMENT. YOUR LENDER |
| 207 | OR MORTGAGE SERVICER MAY BE WILLING TO NEGOTIATE A PAYMENT PLAN |
| 208 | OR A RESTRUCTURING WITH YOU FREE OF CHARGE. |
| 209 |
|
| 210 | (d) The inclusion of the statement does not prohibit the |
| 211 | foreclosure-rescue consultant from giving the homeowner more |
| 212 | time in which to cancel the agreement than is set forth in the |
| 213 | statement, provided all other requirements of this subsection |
| 214 | are met. |
| 215 | (e) The foreclosure-rescue consultant must give the |
| 216 | homeowner a copy of the signed agreement within 3 hours after |
| 217 | the homeowner signs the agreement. |
| 218 | (5) FORECLOSURE-RESCUE TRANSACTIONS; WRITTEN AGREEMENT.-- |
| 219 | (a)1. A foreclosure-rescue transaction must include a |
| 220 | written agreement prepared in at least 12-point uppercase type |
| 221 | that is completed, signed, and dated by the homeowner and the |
| 222 | equity purchaser before executing any instrument from the |
| 223 | homeowner to the equity purchaser quitclaiming, assigning, |
| 224 | transferring, conveying, or encumbering an interest in the |
| 225 | residential real property in foreclosure. The equity purchaser |
| 226 | must give the homeowner a copy of the completed agreement within |
| 227 | 3 hours after the homeowner signs the agreement. The agreement |
| 228 | must contain the entire understanding of the parties and must |
| 229 | include: |
| 230 | a. The name, business address, and telephone number of the |
| 231 | equity purchaser. |
| 232 | b. The street address and full legal description of the |
| 233 | property. |
| 234 | c. Clear and conspicuous disclosure of any financial or |
| 235 | legal obligations of the homeowner that will be assumed by the |
| 236 | equity purchaser. |
| 237 | d. The total consideration to be paid by the equity |
| 238 | purchaser in connection with or incident to the acquisition of |
| 239 | the property by the equity purchaser. |
| 240 | e. The terms of payment or other consideration, including, |
| 241 | but not limited to, any services that the equity purchaser |
| 242 | represents will be performed for the homeowner before or after |
| 243 | the sale. |
| 244 | f. The date and time when possession of the property is to |
| 245 | be transferred to the equity purchaser. |
| 246 | 2. A foreclosure-rescue transaction agreement must |
| 247 | contain, above the signature line, a statement in at least 12- |
| 248 | point uppercase type that substantially complies with the |
| 249 | following: |
| 250 |
|
| 251 | I UNDERSTAND THAT UNDER THIS AGREEMENT I AM SELLING MY HOME |
| 252 | TO THE OTHER UNDERSIGNED PARTY. |
| 253 |
|
| 254 | 3. A foreclosure-rescue transaction agreement must state |
| 255 | the specifications of any option or right to repurchase the |
| 256 | residential real property in foreclosure, including the specific |
| 257 | amounts of any escrow payments or deposit, down payment, |
| 258 | purchase price, closing costs, commissions, or other fees or |
| 259 | costs. |
| 260 | 4. A foreclosure-rescue transaction agreement must comply |
| 261 | with all applicable provisions of 15 U.S.C. ss. 1600 et seq. and |
| 262 | related regulations. |
| 263 | (b) The homeowner may cancel the foreclosure-rescue |
| 264 | transaction agreement without penalty if the homeowner notifies |
| 265 | the equity purchaser of such cancellation no later than 5 p.m. |
| 266 | on the 3rd business day after signing the written agreement. Any |
| 267 | moneys paid by the equity purchaser to the homeowner or by the |
| 268 | homeowner to the equity purchaser must be returned at |
| 269 | cancellation. The right to cancel does not limit or otherwise |
| 270 | affect the homeowner's right to cancel the transaction under any |
| 271 | other law. The right to cancel may not be waived by the |
| 272 | homeowner or limited in any way by the equity purchaser. The |
| 273 | equity purchaser must give the homeowner, at the time the |
| 274 | written agreement is signed, a notice of the homeowner's right |
| 275 | to cancel the foreclosure-rescue transaction as set forth in |
| 276 | this subsection. The notice, which must be set forth on a |
| 277 | separate cover sheet to the written agreement that contains no |
| 278 | other written or pictorial material, must be in at least 12- |
| 279 | point uppercase type, double-spaced, and read as follows: |
| 280 |
|
| 281 | NOTICE TO THE HOMEOWNER/SELLER |
| 282 | |
| 283 | PLEASE READ THIS FORM COMPLETELY AND CAREFULLY. IT CONTAINS |
| 284 | VALUABLE INFORMATION REGARDING CANCELLATION RIGHTS. |
| 285 |
|
| 286 | BY THIS CONTRACT, YOU ARE AGREEING TO SELL YOUR HOME. YOU |
| 287 | MAY CANCEL THIS TRANSACTION AT ANY TIME BEFORE 5:00 P.M. OF THE |
| 288 | THIRD BUSINESS DAY FOLLOWING RECEIPT OF THIS NOTICE. |
| 289 |
|
| 290 | THIS CANCELLATION RIGHT MAY NOT BE WAIVED IN ANY MANNER BY |
| 291 | YOU OR BY THE PURCHASER. |
| 292 |
|
| 293 | ANY MONEY PAID DIRECTLY TO YOU BY THE PURCHASER MUST BE |
| 294 | RETURNED TO THE PURCHASER AT CANCELLATION. ANY MONEY PAID BY YOU |
| 295 | TO THE PURCHASER MUST BE RETURNED TO YOU AT CANCELLATION. |
| 296 |
|
| 297 | TO CANCEL, SIGN THIS FORM AND RETURN IT TO THE PURCHASER BY |
| 298 | 5:00 P.M. ON ___________(DATE) AT ________________________ |
| 299 | (ADDRESS) . IT IS BEST TO MAIL IT BY CERTIFIED MAIL OR OVERNIGHT |
| 300 | DELIVERY, RETURN RECEIPT REQUESTED, AND TO KEEP A PHOTOCOPY OF |
| 301 | THE SIGNED FORM AND YOUR POST OFFICE RECEIPT. |
| 302 |
|
| 303 | I (we) hereby cancel this transaction. |
| 304 | Seller's Signature |
| 305 | Printed Name of Seller |
| 306 | Seller's Signature |
| 307 | Printed Name of Seller |
| 308 | Date |
| 309 |
|
| 310 | (c) In any foreclosure-rescue transaction in which the |
| 311 | homeowner is provided the right to repurchase the residential |
| 312 | real property, the homeowner has a 30-day right to cure any |
| 313 | default of the terms of the contract with the equity purchaser, |
| 314 | and this right to cure may be exercised on up to three separate |
| 315 | occasions. The homeowner's right to cure must be included in any |
| 316 | written agreement required by this subsection. |
| 317 | (d) In any foreclosure-rescue transaction, before or at |
| 318 | the time of conveyance, the equity purchaser must fully assume |
| 319 | or discharge any lien in foreclosure as well as any prior liens |
| 320 | that will not be extinguished by the foreclosure. |
| 321 | (e) If the homeowner has the right to repurchase the |
| 322 | residential real property, the equity purchaser must verify and |
| 323 | be able to demonstrate that the homeowner has or will have a |
| 324 | reasonable ability to make the required payments to exercise the |
| 325 | option to repurchase under the written agreement. For purposes |
| 326 | of this subsection, there is a rebuttable presumption that the |
| 327 | homeowner has a reasonable ability to make the payments required |
| 328 | to repurchase the property if the homeowner's monthly payments |
| 329 | for primary housing expenses and regular monthly principal and |
| 330 | interest payments on other personal debt do not exceed 60 |
| 331 | percent of the homeowner's monthly gross income. |
| 332 | (f) If the homeowner has the right to repurchase the |
| 333 | residential real property, the price the homeowner pays may not |
| 334 | be unconscionable, unfair, or commercially unreasonable. A |
| 335 | rebuttable presumption, solely between the equity purchaser and |
| 336 | the homeowner, arises that the foreclosure-rescue transaction |
| 337 | was unconscionable if the homeowner's repurchase price is |
| 338 | greater than 17 percent per annum more than the total amount |
| 339 | paid by the equity purchaser to acquire, improve, maintain, and |
| 340 | hold the property. Unless the repurchase agreement or a |
| 341 | memorandum of the repurchase agreement is recorded in accordance |
| 342 | with s. 695.01, the presumption arising under this subsection |
| 343 | shall not apply against creditors or subsequent purchasers for a |
| 344 | valuable consideration and without notice. |
| 345 | (6) REBUTTABLE PRESUMPTION.--Any foreclosure-rescue |
| 346 | transaction involving a lease option or other repurchase |
| 347 | agreement creates a rebuttable presumption, solely between the |
| 348 | equity purchaser and the homeowner, that the transaction is a |
| 349 | loan transaction and the conveyance from the homeowner to the |
| 350 | equity purchaser is a mortgage under s. 697.01. Unless the lease |
| 351 | option or other repurchase agreement, or a memorandum of the |
| 352 | lease option or other repurchase agreement, is recorded in |
| 353 | accordance with s. 695.01, the presumption created under this |
| 354 | subsection shall not apply against creditors or subsequent |
| 355 | purchasers for a valuable consideration and without notice. |
| 356 | (7) VIOLATIONS.--A person who violates any provision of |
| 357 | this section commits an unfair and deceptive trade practice as |
| 358 | defined in part II of this chapter. Violators are subject to the |
| 359 | penalties and remedies provided in part II of this chapter, |
| 360 | including a monetary penalty not to exceed $15,000 per |
| 361 | violation. |
| 362 | Section 2. Section 501.2078, Florida Statutes, is |
| 363 | repealed. |
| 364 | Section 3. This act shall take effect October 1, 2008. |