Gov. Crist Signs Florida Foreclosure Rescue Fraud Bill Into Law
- [Florida] Attorney General Bill McCollum [yesterday] applauded Governor Charlie Crist for signing The Foreclosure Rescue Fraud Prevention Act of 2008 into law. The legislation, which passed this session as HB 643 and was developed in part by members of the Attorney General’s Mortgage Fraud Task Force, will ensure that homeowners are properly informed about their rights before signing a contract with a foreclosure rescue entity in addition to other protections.
With regard to transactions involving repurchase agreements (ie. sale leaseback arrangements and the like that include a buyback right, option to repurchase, etc.):
- The repurchase price cannot exceed a certain threshold and the repurchase agreement is presumed to be a loan.
The Foreclosure Rescue Fraud Prevention Act of 2008 will go into effect October 1.
For more, see Attorney General McCollum Applauds Signing of Foreclosure Rescue Fraud Prevention Act into Law (New law provides important safeguards to help protect homeowners facing foreclosure).
Editorial Note:
While the Florida AG's press release enumerates all the nice things that foreclosure rescue operators now have to do to comply with the statute, the most powerful provision in the new statute (and that may initially go unnoticed) is found in Florida Statute Sec. 501.1377(6) which creates a rebuttable presumption that any foreclosure rescue transaction involving a lease option or other repurchase agreement is an equitable mortgage. See New Florida Law Treats All Foreclosure Rescue Deals Containing A Buyback Right As An Equitable Mortgage Unless Otherwise Rebutted.
In my view, this provision will treat practically every foreclosure rescue transaction involving a sale leaseback with a buyback right attached that otherwise falls within the scope of the new statute as a secured loan. No matter how well the Florida foreclosure rescue operators comply with all the other requirements of the law, if they can't overcome this rebuttable presumption (and based on the Florida case law, it's going to be tough, in my view), the deals will simply be treated as secured loans / equitable mortgages, subject to the Florida usury statutes, and subject to the same rules on foreclosure as any standard mortgage.
Congratulations to the able drafter of the new law who successfully slipped this provision into the statute.
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