Mortgage Fraud in Florida

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FACING FORECLOSURE? Don't become a victim to vultures with rescue programs.

Gripped by fear, many financially troubled South Floridians are falling victim to foreclosure schemes that can rob them of their homes and their equity.

Real estate experts say the occurrence of fraud is growing with the number of foreclosures, which has soared in Broward, Palm Beach and Miami-Dade. According to a study of 100 metropolitan areas released Friday, Fort Lauderdale has the second-highest rate of homes facing the possibility of foreclosure, behind only Detroit. Miami ranks No. 4 and the Palm Beach area is No. 13.

Firms making dubious claims approach homeowners and promise to help them keep their property. While some so-called foreclosure rescue companies are legitimate, many fleece people who are so desperate that they agree to deals they don't fully understand.

In one common scheme, the fraudster persuades the homeowner to sign over the property and pay rent to keep living in it. When the owner-turned-renter believes he's eligible to regain the title, the fraudster refuses to cooperate.

Signatures, documents and all sorts of data are forged or fabricated in the most blatant cases. The victims are typically poor or working-class homeowners with little knowledge of real estate transactions.

"It's pure, unadulterated fraud," said Roy Oppenheim, a Weston lawyer who handles real estate cases. "You've got to be so depraved to do that."

There are no easy solutions for someone facing the threat of foreclosure. But people too often make bad decisions because they are overtaken by "a sense of paralysis, like a deer stunned in the headlights," Oppenheim said.

Here are six don'ts that can prevent you from falling for a foreclosure fraud:

Don't agree to anything if you are being rushed

Fraudsters often say a contract needs to be signed quickly or the opportunity will pass. Call them on their bluff. They're probably trying to get you to sign what they want before you ask a more knowledgeable person to look at the deal. Jackie Scott learned that the painful way. Last year she was panicking over the prospect of losing her Fort Lauderdale house. She fell six months behind on the mortgage and wanted to get some cash out of the home's equity.
A Miami mortgage broker proposed that she sign a warranty deed giving him ownership. She said he promised to get her the money if she paid him rent. Scott claims that she never received a penny. The broker tried to have Scott evicted from the home, but was unsuccessful. They later reached a settlement allowing Scott to keep the house if she agreed not to sue him, but the monthly mortgage payment has increased from $900 to $1,166 and she needed to take a second job to pay for it. She also had to put the home in her stepfather's name because of her poor credit rating. "I was too hasty to make a decision," Scott said. "As long as I had the house, I could have gotten a loan. Or I could have sold it." She said she should have sought advice and taken more time before signing the deal.

Don't sign away ownership via a quitclaim or warranty deed without consulting a lawyer

Signing over ownership is risky to begin with because the other side could find or invent a reason not to give you back the home. The National Consumer Law Center, in Boston, says you should be suspicious of any deal to pay rent for your home in order to buy it back over time.
A staff attorney at the law center, said homeowners without a lot of resources could contact their local Legal Aid office, which can help with the case or suggest a lawyer who can. She also recommends contacting the National Association of Consumer Advocates, an organization of more than 1,000 lawyers who represent consumer fraud victims.

Additional information on hiring a lawyer without spending a fortune can be found through the Florida Bar and the American Bar Association. Attorney Oppenheim points out that even the poor can go to a public library and look for lawyers by logging onto the Internet and entering groups of words such as "South Florida real estate attorneys" into a search engine.
To be sure, the poor are at a disadvantage in fighting foreclosure fraud. Many lawyers are reluctant to take cases from indigent clients, "even though that's what we're supposed to do," says Aventura attorney Lawrence R. Metsch. He is representing a Miami-Dade woman who says she has been defrauded by a foreclosure rescue firm. However, Metsch admits, "It's hard to run a practice if all you're doing is good works."

Don't do business with a company or people you know nothing about

Rescue firms learn of impending foreclosures through public records. Some show up at the front door trying to persuade homeowners to enter a deal. Real estate attorneys say you should be suspicious of such companies. Research the firm on the Internet. Type the company's and owner's names into a search engine such as Google or Yahoo. Check with state agencies to determine whether the company is licensed. Visit http://www.myflorida.com/ and look for "licensee search." Call the state Department of Business & Professional Regulation to see if it has any information on the company. Also check with the Better Business Bureau.

Don't be fooled into thinking you have no other options

"Sometimes you can negotiate with the lender," Metsch said. "Usually they don't want to take [the home] back." You can also try to refinance the home, especially if mortgage rates are low. Or you can simply sell it.

Don't sign anything you don't fully understand

Diane Fiala wasn't facing foreclosure, but the lesson she learned is universal. Fiala was tricked by someone who offered to help her find a house to buy in North Lauderdale. She didn't know that the papers she signed gave the man -- the husband of an acquaintance -- ownership of the home. "I believed him," Fiala said. "I didn't read through all the documents. I went into the process blind."

Don't ignore your gut

At first, Fiala resisted signing the papers. "I said no twice, and the third time I said yes," she said. "Listen to your inner instincts." FORT LAUDERDALE, Fla. – Nov. 14, 2006South Florida Sun-Sentinel, Ian Katz.