Mortgage fraud doing well in Florida

The Sunshine State sees many homeowners losing property to mortgage theft

The problem of mortgage theft is a growing one, and at the moment, it is alive and well in Florida. The Sunshine State seems to have just the right conditions for allowing thieves to take hard earned home equity away from unsuspecting homeowners who happen to be in a bit of financial trouble. And lawmakers have so far done nothing to stop the problem.

The theft stems from the ages-old guise of offering “foreclosure help.” A company that specializes in “helping” people in financial trouble finds homeowners who are behind in their mortgages and ends up owning the house and throwing them out. How does this work?

Mortgage companies that are about to foreclose on properties for which they have issued loans must publicly announce their intention to do so. When those lists are published at county courthouses, other companies obtain copies of the lists and sell them to interested investors. Those investors do a bit of digging to determine which of those properties have the largest amount of equity. The ideal property is one that has a fairly high market value, a high amount of equity and a fairly low mortgage balance. Once those houses are identified, the investors contact the owners of the homes either by mail or phone and offer to help them.

The typical deal offered to homeowners is one that allows them to rent the house from the investor for a period of two years. The investor agrees to bring the mortgage payments up to date, which will eliminate the threat of foreclosure from the lender. The owner pays rent and at the end of the two year period he or she has the option of paying a sum to the investor to compensate him for his financial effort.

There’s just one problem with this scenario - the owner always loses the home, and there is no foreclosure help.

The pile of paperwork that the investor requires the owner to fill out to arrange the deal inevitably includes a quitclaim deed. This is a document that, once signed by the owner, hands over ownership of the property to the investor for a sum of $10, which is the minimum amount required by the state. In some cases, the investor discloses the quitclaim deed to the owner but insists that he won’t actually file it unless the owner defaults. In other cases, the investor simply takes the signed document and files it with the county, effectively taking over ownership of the home.

At this point, the owner is now a renter, and is subject to whatever terms the investor imposes. The rent inevitably rises, and once the former owner defaults, the investor simply evicts them from the house and sells it. In some cases, the profits to the investor can run in the hundreds of thousands of dollars.

And it’s all legal. Some states, such as Minnesota, have enacted tough laws protecting homeowners from such outright theft, but the Florida legislature has so far been unable to pass legislation in the face of loud opposition from numerous business interests.

As we have discussed before, there is no such thing as a company that will “help” you avoid foreclosure. If you cannot pay your mortgage, you should call your lender and tell them about your problems. Your best source of help is the company to which you owe the money.