New law takes aim at mortgage fraud

Wednesday, October 1, 2008

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The new law was designed to help homeowners stay in their houses.

TALLAHASSEE (Bay News 9) -- A new law has been designed to protect struggling homeowners.

It takes aim at foreclosure rescue companies. All too often, the deals they cut can make matters even worse.

The Foreclosure Fraud Protection Act takes effect today. Attorney General Bill McCollum said con artists have been preying on distressed homeowners, tricking them into signing over the deeds to their homes.

The schemes are packaged as 'lease-back' or 'repurchase' deals. Under the new law, the deals have to be put in writing. And they have to recommend homeowners consult their mortgage company before signing.

And even if they do sign, they will have three days to get out of it, penalty-free.

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"Anybody who's thinking that they might have to give up their home should go to the bank or the mortgage company,' McCollum said. "(They should) try to negotiate somehow to reduce the payments, change the plan, so they can afford it.'

The law kicks in just a couple months after state leaders learned of a mortgage fraud ring stretching from Miami to Tampa.