Mortgage, Foreclosure "Rescue" Fraud Rampant

Florida Attorney General Bill McCollum addressed the Central Florida Bankruptcy Law Association last Friday at their annual seminar. He noted that Florida is the second highest foreclosure state in the U.S. (after Nevada), and the second highest mortgage fraud state (after California). Not only was there near-record fraud in the making of the mortgages, but now the current schemes center around so-called "foreclosure defense."

Mr. McCollum told CFBLA members that the AG's office is currently prosecuting about 40 criminal mortgage fraud cases, some 40 civil mortgage fraud cases, looking into a further 80 cases where mortgage fraud is suspected, and another some 80 cases of interest where the AG is interested in the initial facts.

McCollum pointed out that pursuant to Florida law, in particular, §501.1377, foreclosure defense firms are prohibited from accepting any payment in advance, no matter what form that payment takes. McCollum said that Florida Courts are interpreting the section broadly, and that even so called "forensic" mortgage services fall under the same rule. So, homeowners should not agree to pay any of these services up front, until a modification has been obtained.

If you are a homeowner facing the possibility of foreclosure, your best bet is to attempt to workout a modification with your lender, and if that fails, contact an attorney. If you cannot afford a private attorney, you can contact legal aid or the Orange County Bar Association for help.