Too many Florida foreclosure rescue companies have really been Florida lose-your-house-and-make-us-rich companies.
It's getting embarrassing for the Sunshine State. Three weeks ago, the Federal Trade Commission announced lawsuits against six foreclosure prevention operations deemed to be crooked.
Five of them — 83 percent —were in Florida. Most took large fees from desperate homeowners up front, and performed little or no rescue work in return.
That's supposed to change starting Jan. 1 in the biggest overhaul to the Florida mortgage brokerage business in decades.
The goals are laudable: No more fly-by-night correspondence lenders. No more Twitchy Tim's Homes R Us. No more ex-convicts renting out shop fronts to advertise their shady services.
These mud-sucking bottom feeders will continue to exist, but the state hopes to pin them in the spotlight of the new regulations.
What do the new lending laws mean for Average Joe Tampa Bay Homeowner? Here are some of the biggest changes:
• With a few exceptions, foreclosure rescue/loan modification shops will be the preserve of licensed mortgage brokers. Lawyers can continue to represent homeowners with banks as long as it's not a primary business but a sideline of other legal work.
• The new rules reaffirm and strengthen the state's ban on up-front fees for foreclosure rescue operations. Only when the loan modification is concluded can a mortgage broker collect a fee. And the deal must adhere to a clear written contract the broker provides upfront.
• The state plans to purge criminals, the unqualified and the uneducated from the ranks of mortgage brokers. The new rules provide for federally approved criminal background checks, credit checks and state testing. You won't get in the door without a high school diploma. Vaguely defined "moral turpitude" can get you disqualified. Florida already had much of this in place, but the new rules are tougher.
• Previously unlicensed loan originators will need to get a license — or get out of town. During the housing gold rush in 2004-06, Florida lenders hired thousands of originators. Often the only requirements were a pulse and a pair of shoes. Originators get too much blame for the real estate crash — they were front line grunts without a grip on the purse strings — but they routinely flubbed their duty of sifting the credit-worthy from the deadbeat.
The rules have been two years in the works. Attorney General Bill McCollum's office has filed 17 lawsuits against mortgage fraud or foreclosure rescue scams. The Federal Trade Commission's dramatically named "Operation Stolen Hope" released a partial list questionable Florida operators: Crowder Law Group, Crossland Credit Counseling Corp., Home Assure LLC, First Union Lending, Truman Foreclosure Assistance and Safe Harbour Foundation of Florida.
In the animal kingdom, the proverbial lion preys on the proverbial wounded gazelle. The fact that we even needed the new Jan. 1 rules proves what callous beasts some of us can be.
James Thorner can be reached at (813) 226-3313.