New Foreclosure Fraud Law in Florida goes into effect October 1.

I just received the following important information from my title company for Florida residents regarding a new law that was just passed regarding Foreclosure Fraud in Florida - this affects Real Estate agents as well.

"NEW FORECLOSURE LAW IN FLORIDA

This is the interpretation of two Reputable Florida Attorneys of the New Foreclosure Law.

The law was passed and goes into effect October 1, 2008. Here are some highlights of the law:

1. It will eliminate “subject to” on a primary residence in foreclosure.

2. A person in foreclosure on their primary residence will have 3 days to change their mind when selling their house. This is similar to a refinance of a mortgage where the Seller can decide whether or not to keep the new mortgage on the property.

3. Real Estate Agents could be responsible for knowing the status of the Seller's mortgage. We always thought that the Real Estate Agent should know the balance of the mortgage and now whether or not they are in foreclosure.

4. Many Real Estate agents and investors may just choose not to help people in foreclosure because of all the extra potential liability.

5. This law limits the ability to collect any up front fees, as some short sale negotiation companies do and the seller will be restricted from paying them.

6. It is a gray area when it comes to exclusions or exemption of real estate agents."

This causes me some alarm as many Realtors know, sometimes sellers are not completely honest with their Realtors about what they owe on their mortgage. We can check the title to see the status but if a seller has not been paying the mortgage and the bank has not gotten around to filing foreclosure papers yet - they are in pre-foreclosure - are we expected to know that if the seller doesn't disclose that information? For those Realtors that handle short sales, are we now going to be facing higher liability?

My only thought on how to avoid potentially liability is that when you are listing a home, ask to see the coupon book or have the seller phone the lender while you are there to verify the last payment amount and date. Although this could be embarrassing if the seller feels their new Realtor doesn't trust their word that they are up to date on payments. *Sigh*.

Here's a link to the New Florida Law

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Liane Jamason, REALTOR
Keller Williams Realty
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