Foreclosure Defense – Protecting Yourself From Fraud During and After Foreclosure

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We are now coming out of a global pandemic where many people have been going through a very difficult time. If you were out of work during the pandemic, you might now be in the midst of foreclosure proceedings due to not being able to pay your mortgage. This can be one of the most stressful situations that someone can go through due to the potential loss of one’s home. An even more stressful part of this can be a vulnerable homeowner dealing with people and companies attempting to commit fraud against them. What are some of these fraudulent actions and how can you protect yourself at this difficult time?

Foreclosure actions are public record. Many people who want to take advantage of vulnerable homeowners spend hours poring over public records and can easily get your phone number and address to find you. If you are facing foreclosure sale from your homeowner’s association, they will reach out to you and offer to “buy” your property for a nominal amount promising they will take care of the foreclosure case for you. You would transfer the title to the property over to them, they would rent out the property to someone else, and not take care of the foreclosure case. Sometimes there is a second foreclosure case from the mortgage holder. It is all a money-making scam for this person, and it leaves the former owner with mounds of debt and no home due to the different foreclosure cases.

For instance, in 2017 the Florida Attorney General sued and won against a company called HOA Problem Solutions, Inc. based on their fraudulent practices. This company would contact people before a homeowner’s association foreclosure sale and buy the property for a fraction of the fair market value of the property. They would convince the property owner they would take care of all legal problems with the property, including any foreclosure actions from the mortgage lender. In fact, they did nothing of the sort. The property would be sold at the association’s foreclosure sale and the company would use someone to bid extremely high on the auction, and then not follow through with paying the Clerk of Court. The auction would then have to be reset for another date and the cycle would continue. While they extended the case this way, they would be collecting rent on the property from unsuspecting renters. They also did not do anything to defend any other foreclosure cases and the former owner would still be liable for all money owed on the mortgage.

If the property actually did sell at auction, this company would then attempt to retrieve the Florida Foreclosure Sale Surplus Funds on its own behalf instead of the former owner. Florida Statute 45.033(1) states, “the owner of record of real property on the date of the filing of a lis pendens is the person entitled to surplus funds after payment of subordinate lienholders who have timely filed a claim.” This company acquired the title to the property after the foreclosure case was started and therefore should not have been able to retrieve the surplus funds. It should have gone to the former owner.

Next, Florida Statute 697.08 deals with what is called “Equity Skimming”. The statute defines this practice as purchasing properties “that are subject to a loan that is in default at the time of purchase” and “failing to make payments on the mortgage regardless of whether the purchaser is obligated on the loan and apply rents from the property for the person’s own use”. This means that an investor has offered to buy your home while you are currently in default, but you still have plenty of equity in the property. They only offer what you owe, and not the fair market value of the home. They then offer to lease the property back to you, so you don’t have to move or they rent it out to someone else after you have moved out. They get the benefit of the equity in the property and the rental income. If anyone offers this to you, hang up the phone. They may pay off the lender, but they get to keep the equity that should rightfully be yours. This is expressly against Florida law. Unfortunately, many homeowners are desperate and fall for these tricks because they either don’t want to deal with the foreclosure case, or they just don’t understand what the true value of the home is.

If you have been contacted by an investor attempting to buy your home while you are in foreclosure, I highly recommend you speak to a qualified Foreclosure Defense Attorney as well as a Realtor. A Foreclosure Defense Attorney can help you to defend your case, potentially help you to do a Loan Modification, or if the case has already concluded, they can help you with retrieving your Florida Foreclosure Sale Surplus Funds. A Realtor can help you to assess the home’s proper value and let you know if you have equity in the property. Sometimes selling the property can net you enough proceeds to both payoff the mortgage and give you enough funds to start over.

If you are facing foreclosure from your homeowner’s association or your mortgage holder, do not speak to anyone who is trying to buy your property for far less than what it is worth. Instead, please give me a call first. I can help you decide whether loan modification is possible, or if selling the property through a certified Realtor is your best bet. If your property has already sold at auction, I can help you to make sure you get the most of your Florida Foreclosure Sale Surplus Funds. I handle Foreclosure Defense, Foreclosure Sale Surplus, and Tax Deed Sale Surplus funds in every County in the State of Florida. Please give me a call for a free consultation.

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