Fort Lauderdale Mortgage Fraud Criminal Defense Attorney on ‘Mortgage Rescue’ Scams

April 6, 2009 by David S. Seltzer

As I mentioned last week, I am writing a series of posts on mortgage fraud -- an important topic in Florida right now. In 2008, Florida was second in the nation (behind Rhode Island) in mortgage fraud, and many of our cities are experiencing very high rates of default and foreclosure. In response, organizations specializing in stopping foreclosures or modifying home loans have sprung up throughout Florida. Some of these may be legitimate -- but as the Obama Administration warned today, others are just fronts for a type of mortgage fraud perpetrated against homeowners.

Thanks to the 2008 Foreclosure Rescue Fraud Prevention Act, it’s illegal in Florida for a foreclosure consultant to demand up-front payment. But some of them do it anyway, then simply fail to help -- and that’s not the only scam. Other common schemes include persuading the homeowner to sign away ownership of the home; selling insurance for foreclosure and relocation; setting up a “refinance” deal that really transfers ownership; and signing the distressed homeowner up for unnecessary, expensive services or loans. At best, these schemes take homeowners’ money and hope without giving them anything in return. At worst, they actually steal the home and leave the victim deeper in debt than ever.

The Florida Department of Justice has promised to crack down on mortgage fraud, and as a Miami mortgage fraud criminal defense lawyer, I have been watching the news -- and I’ve already seen the results. On April 3, Jacksonville’s News 4 reported that the state sued a company called National Foreclosure Counseling Services for false advertising, charging up-front fees and then failing to perform any services. On the same day, the Orlando Business Journal said another company, Homestead Protection Services, had agreed to voluntarily dissolve and pay restitution to its customers for multiple violations of the Foreclosure Rescue Fraud Prevention Act.

These schemes are mortgage fraud, just as lying to a bank in a loan application is mortgage fraud. In fact, some of them involve lying to banks, as well as homeowners, about issues like the homeowners’ consent or knowledge, or the value of the home. As a South Florida mortgage fraud criminal defense attorney, I only expect to see more news reports like these in the next few months. If the amount of political and media attention paid to this issue is any indication, law enforcement is going after mortgage fraud in a big, big way. That means lots of headlines and big, splashy news conferences.

Most of the people charged will probably be guilty -- but I’ve been a Miami mortgage fraud criminal defense lawyer too long to think prosecutors and police never make mistakes. I hope that legitimate companies doing their best to help distressed homeowners aren’t caught up by law enforcement’s enthusiasm for punishing con artists.