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Florida Law Focuses on Mortgage Fraud

In the second quarter of 2008, Florida ranked 4th in the nation in percentage of home foreclosures. As a result of the increase in foreclosures in Florida, the Florida legislature and law enforcement officials are cracking down on what they consider mortgage fraud. This year, Florida passed into law the Foreclosure Rescue Fraud Prevention Act, which specifically deals with what is referred to as “rescue foreclosure” schemes to defraud. In such cases, the government alleges that companies target individuals who are headed towards foreclosure, offer them a loan to avoid foreclosure and deceive them into signing over the title to the property which is then sold by the company, often after collecting fees, refinancing and stripping the home of equity. The law allows homeowners a five day period to cancel any such contract and provides for significant financial penalties for any company that violates the law. The Florida Attorney General’s Office is currently pursuing a lawsuit against National Foreclosure Management claiming they defrauded Florida homeowners out of approximately $1.7 million in home equity.