Governor Charlie Crist approved new Section 501.1377 F.S. which goes into effect on October 1, 2008. It’s well intentioned and aimed at protecting homeowners in Florida who are facing foreclosure. There’s a prohibition against collecting an advance fee from any Florida homeowner in foreclosure which is great, but unfortunately, the new law doesn’t contain an exemption for attorneys.
In other words, the way I understand the new law, come October, attorneys in Florida will no longer be able to collect a retainer to assist Florida homeowners in defending a foreclosure action. It would also seem to prevent bankruptcy attorneys from collecting a fee in advance when assisting a homeowner in the throes of foreclosure with a bankruptcy filing.
Not many attorneys in Florida are willing to work for free, so hopefully I’m misunderstanding Florida’s new foreclosure law.
Posted by Paul – Florida Foreclosure Law
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{ 15 comments… read them below or add one }
OK, since there are no posts in this lonely thread, I’ll post an email that I received a minute ago from one of my Florida attorneys:
“Paul,
I just returned from the Tampa Bay Bankruptcy Attorney Bar Association dinner and we’re all up in arms about the new law. As a Chapter 7 attorney, I simply cannot wait until after services are completed to collect payment, as the debt to me is then discharged and I’m prohibited from collected under federal law.
Clearly the law needs to change before October, or we are all speculating that it will be found unconstitutional once challenged – at least as it applies to most attorneys.”
How weird. Florida goes from being THE haven for debt-dodgers to this — I wonder if the law is really that ill-considered or if there’s some kind of backlash involved?
Gina has a point. Florida is a haven for people who have stopped making mortgage payments and are still living in multi million dollar mansions. This could be a kind of backlash to evict these sqautters.
Here’s my take on it.
California exempted attorneys from their version of the same law which also defines a ‘foreclosure consultant’ and, as a result, attorneys in CA work in unison with non-exempted sales people to procure advance fees for homeowners in foreclosure. The fee goes from the homeowner to the attorney first. Then, the attorney writes a check to the non-attorney for a ‘forensic loan analysis’ or whatever the flavor of the day is.
I believe the Florida legislature was sincere in attempting to ‘fix’ this problem, although in ‘fixing’ one problem, they caused another.
Was this a big problem before the law. Because it seems it will leave people facing foreclosure in the dark if they are not able to hire someone to help them escape foreclosure.
It seems that in the the legislatures haste to fix one problem they just create another. You would think they would be able to do better but “haste makes waste”
Maybe this new law will decrease the number of foreclosures overall, but those who are going through the foreclosure process after October will be completely out of luck.
Overall, I’m pleased with the new law.
My companies help Florida homeowners effectuate short sales and we receive our compensation at closing. This new law will remove much of the riff-raff that are taking money from homeowners in distress and not delivering as promised. It also cleans up the sale-leaseback scams in the Florida marketplace by limiting their return to 17% per annum.
The only problem is that, at present, it would seem to leave the Florida homeowner a pro se litigant.
Paul, please feel free to have the e-mailer in your original post contact me directly regarding this issue, via the e-mail I have signed up with to comment. Attorneys in the Bay Area and Orlando, and hopefully elsewhere in Florida, are formulating plans of attack on both the legislative and judicial fronts to fix this “glitch” (as one state rep called it).
Thanks.
Mike, thanks for the comment. I see you practice law in the Tampa Bay area of Florida.
I’m thankful you are working towards a solution. I’ll direct the Florida attorneys I work with your way.
Wow, another example of ill-thought, knee jerk, “me too” lawmaking.
What irks me about this kind of thing even more than dumb overisghts like this is how the investment community is treated like the seedy underbelly of real estate — the bad actions of a few bad apples have enables lawmakers to paint any/ever investor who buys a house preforeclosure like a dirtbag.
No respect, I tell ya!
…jp
Update: July 8, 2008
Florida Attorney General Bill McCollum has exempted Florida attorneys from the Florida Foreclosure Law with the following provision:
“Pursuant to its authority under Section 501.1377(2)(b)2, Florida Statutes (2008), the Office of the Florida Attorney General, Department of Legal Affairs, hereby approves for exclusion from the definition in this provision of a foreclosure rescue consultant, a person licensed to practice law in this state, when such person provides legal representation to a client with respect to a foreclosure.”
it keeps getting worse here and it seems like it is in america to.
Great article. I am from india and this kind of things never happen here.
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sam
Florida Treatment Centers
Hey Paul, a question for you…
Which is best for the homeowner?
1- Keep the Home.
2- Exit the home via Short Sale.
We all know that #1 is the best option, especially for the future of the industry. But what do we find going on…Realtors are doing Short Sales. Is this strictly a commission based solution? It certainly appears that way, because what else is a Realtor to offer as a solution? And how else can a Realtor make any money? What IF you could help save homes rather than offer an exit strategy…which hurts the industry as a whole?
I am part of one of those many Loss Mit. companies. It is sad that so many feel they have to scam homeowners when they could actually make it a legit business and help people. Instead, they scam, and scam, and scam, and kill the economy, killing the very country they live in.
The company I WAS a part of, well, let’s just say there was an ethical problem with the owner that a couple of his right hand men discovered. After much discussion about solving/reversing the problem, and realizing the owner wasn’t going to alter his methods, these two men exposed the issues to the sales force (consultants).
To make a long story short, many of us wanted to be a part of an ethical company committed to helping homeowners save their homes. These two men found an excellent processing company, one that handles 2000-3000 cases/month, and because of their contacts within most of the major banks/lending companies, are able to secure the mitigation within 25-35 days. Our sales force has become a marketing leg for this company. We will also be handling debt settlement solutions since so many of these homeowners are very deep in unsecured debt such as credit cards. For desperate seniors (62 and older), we can offer reverse mortgages as a method of saving the home. We are also looking for additional solutions.
Sadly, because of all of the scams going on out there, gaining a clients trust is a difficult monster to tame…as it is also difficult to gain the trust of those in the Real Estate Industry.
One major problem with this law is that no one works for free. The only way to work around this problem is to use an attorney and to place the fee in an escrow account, to be payable upon completion of service, which is how most companies in Ca. have handled their new laws.
For those who are interested in helping homeowners save their homes, I’ll be happy to put you in touch with the two men I mentioned. A lot of Loss Mit. companies operate similar to franchises in that they charge a fee to become a part of the system. At some point in Oct. we will charge a small training fee, but it will be minimal. The reason for this has to do with the 80/20 rule in that 20% do 80% of the work, and training does cost time and money. Those who have an investment involved tend to take it more serious. We will return most of the training fee to those who produce. For now…no fees at all as we move to get this ship out to sea.
We invite anyone interested in helping homeowners to check out our services. Test us out, talk with the new owners, do whatever you feel is necessary and let us know what it takes to earn the trust of those in the Industry. Any of you can do what we do, as the methods have been simplified and take very little of your valuable time. You can add Loss Mit. to your business, or simply refer clients to us for a referral fee. “Together” we can help to Save Homes Across America!
Feel free to contact me:
Gregory Lohr
SavingYourHome@gmail.com
803-461-4210
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