Facing Foreclosure in Florida? Know This Law Before You Sign Anything (F.S. 501.1377)

Chapter 1: Why this law exists 0:000 secondsYour name, your address, and your situation become public record the moment a Liz Pinions is filed on your property. Anyone can look it up and 0:099 secondswithin days, sometimes within hours, the calls start. The letters show up in the mailbox and people even start knocking on your door. People are offering 0:1818 seconds[music] to save your home. They're offering cash for your property and they're telling you to sign something right now before it's too late. This 0:2525 secondshappens to homeowners over and over again. Someone is already stressed, already scared, already losing sleep. 0:3232 seconds[music] And then the phone starts ringing when people see a chance to make money because you're stressed out. 0:3939 secondsFlorida lawmakers saw this happening also and they wrote a law to protect you. Today we are going to discuss that specific statute and show you the scams 0:4848 secondsit's designed to stop and also explain a tactic involving wholesalers that almost nobody talks about but you absolutely need to 0:5656 secondsunderstand before you make any decisions about your property. 1:011 minute, 1 secondI'm Jim Armstrong, a licensed realtor with Momentum Realy. I'm a certified short sale and foreclosure resource or otherwise known as an SFR. As an SFR, 1:091 minute, 9 secondsI'm focused on helping homeowners in financial trouble or facing foreclosure through short sales and other options. Chapter 2: Who I am and disclaimer 1:161 minute, 16 secondsThat's my everyday along with the people that work on these files with me. 1:211 minute, 21 secondsNow, before we go any further, I need to say this upfront. I'm not an attorney. 1:251 minute, 25 secondsI'm not going to tell you what's legal or what isn't. What I'm going to do is walk you through the statute in plain English and help you know what questions 1:331 minute, 33 secondsto ask. For anything beyond that, you need a Florida real estate attorney. 1:381 minute, 38 secondsI'll remind you of that again before we're done. And of all the things you need to know in your situation are your rights. Know your rights before you sign 1:461 minute, 46 secondsanything with anyone. I don't care who they are. I don't care how good it sounds. Know the law first. Then you can make your decisions. 1:551 minute, 55 secondsThe law is Florida statute 501.1377. Chapter 3: Why the Florida Legislature wrote this law 2:002 minutesIt's official name is the foreclosure rescue fraud prevention act. We're going to review it in plain English. so you 2:082 minutes, 8 secondscan actually see it, understand it, and protect yourself. Before we get into the weeds, I want you to understand why the Florida legislature wrote this law in 2:162 minutes, 16 secondsthe first place. Because the why matters here. When a homeowner falls behind on their mortgage and a LIS pendance gets filed, that's the filing that goes in 2:242 minutes, 24 secondsthe official public record. And if you don't understand what a list pendance is, check out my video that I just recently uploaded called what a list 2:312 minutes, 31 secondspendance actually means. However, in short, it's a legal notice that tells the world there's a lawsuit pending on the property. Now, here's the part that 2:392 minutes, 39 secondscatches people off guard. There are companies, people, and operations that watch those filings every single day. 2:472 minutes, 47 secondsThey pull the list and they get your name, your address, and the details of the filing. And then they reach out to you. They have an offer. Sometimes it's 2:562 minutes, 56 secondsa phone call. Sometimes it's a knock on your door. And look, let me be very clear here. Not everyone who contacts 3:043 minutes, 4 secondsyou is a bad actor. There are real professionals who work in this space. 3:083 minutes, 8 secondsI'm one of them. But the Florida legislature saw that when someone is about to lose their home, they're in a bad spot. And people in bad spots can be taken advantage of. So, let's dive in. Chapter 4: 1 No upfront fees 3:193 minutes, 19 secondsFlorida statute 501.1377 lays out specific things that are allowed and not allowed. Let's walk 3:273 minutes, 27 secondsthrough them and see what they look like in real life. Because reading the law is one thing, but seeing the scam that's sitting in front of you, that's a whole 3:343 minutes, 34 secondsanother thing. One, no upfront fees. A foreclosure rescue consultant cannot 3:423 minutes, 42 secondscharge or collect any money before the work is actually done. Not a retainer, not a processing fee, not a good faith 3:493 minutes, 49 secondsdeposit, nothing. The work gets done first. Anyone doing the work gets paid after they deliver on what they 3:563 minutes, 56 secondspromised, not before. what this looks like in action. Well, someone calls you and says, "We can help you save your home, but we need $2,500 to get 4:044 minutes, 4 secondsstarted." That covers our filing fees, our startup costs. So, you hand over the money and then you hear nothing. Or you 4:134 minutes, 13 secondshear a lot of excuses or the help that they promise. You find out you could have done that on your own by just making a phone call to your lender. 4:214 minutes, 21 secondsMeanwhile, your money's gone and the clock is still ticking and has been the entire time. That's the kind of thing that this statute was written to stop. 4:294 minutes, 29 secondsIf that happens to you, talk to an attorney because they can tell you exactly where you stand. Number two, no promises that I'll save your home. This Chapter 5: 2 No promises to save your home 4:394 minutes, 39 secondsone matters because it goes after an emotional pitch. If someone tells you they can stop the foreclosure, guaranteed you'll you'll keep your house 4:474 minutes, 47 secondsor they make a I'll make the whole problem go away. That's a red flag under Florida law. Here's why. What happens in a foreclosure depends on the lender. 4:574 minutes, 57 secondsYour money situation, the property value, and the process that involves several other parties. No one person, no 5:055 minutes, 5 secondsone company can guarantee a result in this situation. Anyone who tells you otherwise, they're not being honest with you or they don't fully understand the 5:135 minutes, 13 secondsprocess well enough to be handling your situation. 5:175 minutes, 17 secondsWhen I work with a homeowner, I tell them the plain truth. Together, we cover your options. We discuss the realistic market and the conditions in relation to 5:275 minutes, 27 secondsyour situation. I don't promise anything, especially things I can't control. And neither should anyone else. 5:365 minutes, 36 secondsNumber three, no taking title of your property. This is a big one, and this is where people get hurt really badly. Some of these Chapter 6: 3 No taking title to your property 5:455 minutes, 45 secondsoperations work by talking the homeowner into signing over the deed. They tell them it's temporary. They say it's to protect you. Yeah, it's just why we work 5:545 minutes, 54 secondsout this deal. They say they'll give it back once everything is sorted out. 5:585 minutes, 58 secondsUnder Florida law, a foreclosure rescue consultant cannot take title to your home as part of the rescue deal. 6:076 minutes, 7 secondsThat is legal title or even equitable interest. Doesn't matter. If someone asks you to sign over the deed, that should end the conversation. Walk away. 6:166 minutes, 16 secondsNo, safely. Run away. I'll say that again because it matters. If anyone for any reason while claiming to help you 6:236 minutes, 23 secondswith your foreclosure asks you to transfer your title or sign over the deed to them, stop. Leave the room. Call 6:306 minutes, 30 secondsan attorney. This is exactly the kind of deal this statute was written to prevent. 6:376 minutes, 37 secondsNo sale or lease back schemes. 6:416 minutes, 41 secondsThis is a sneaky one because on the surface it sounds like a really good deal. Here's how it works. Someone offers to buy your house. They tell you 6:486 minutes, 48 secondsthat after the sale, you can stay in the home as a renter. You keep living there. The foreclosure just goes away, right? 6:566 minutes, 56 secondsSounds good. In practice, here's what really happens. The new owner now controls the property. Chapter 7: 4 No sale or leaseback schemes 7:037 minutes, 3 secondsYour equity is gone. You're now a tenant, not the homeowner any longer. 7:097 minutes, 9 secondsyou have no ownership rights and your one missed rent payment from getting evicted on top of everything else that 7:167 minutes, 16 secondsyou've been dealing with. The statute blocks this in the context of foreclosure rescue because it takes the homeowner's equity away while pretending 7:257 minutes, 25 secondsto help them out. You think you're saved, but what actually happened is you lost your house and became a renter in it. 7:327 minutes, 32 secondsNumber five, everything has to be in writing. If someone is going to provide you foreclosure rescue services, the deal has to be in writing and in detail. 7:417 minutes, 41 secondsThe law says the written agreement must include the exact services they're going to provide, the total cost, the terms of payment, and notice of your right to cancel. 7:527 minutes, 52 secondsHere's the thing. The agreement has to be in at least 12point uppercase type. 7:587 minutes, 58 secondsThe legislature didn't want you to get buried in the fine print. They wanted you to be able to read it. 8:048 minutes, 4 secondsIf someone gives you a contract to sign and it's dense, small, hard to follow, or missing any of those required items, 8:118 minutes, 11 secondsthat's a problem. Number six, you get three days to cancel. Chapter 8: 5 Everything has to be in writing 8:158 minutes, 15 secondsThis one is about the agreement itself, not the money. The money is covered in number one. After you sign a foreclosure rescue agreement, you have three 8:238 minutes, 23 secondsbusiness days to cancel the deal. Walk away, tear it up. No questions asked, no penalty, no cost. You just say, "I 8:308 minutes, 30 secondschanged my mind." Done. Now, if you did pay money, which you shouldn't have because of number one, this is the part 8:398 minutes, 39 secondsof the statute that says that they have to give it back within 10 days after the cancellation. This is your cooling off period. The legislature put it in there 8:468 minutes, 46 secondsbecause they knew people in trouble make decisions under pressure that they wouldn't have made otherwise. Three days gives you time to think, talk to someone 8:548 minutes, 54 secondsyou trust, and talk to an attorney, to read the contract again with fresh eyes. 8:588 minutes, 58 secondsIf anyone tells you this deal has to happen today, right now, no cooling off period, that should raise some serious questions in your mind. Chapter 9: 6 Your 3-day right to cancel 9:079 minutes, 7 secondsReal professionals know this law exists. 9:099 minutes, 9 secondsReal professionals respect the 3-day window. If someone is trying to rush you past it, that tells you everything you need to know. This is the part that 9:189 minutes, 18 secondsdoesn't get talked about enough. And I want to spend some time on this because this is where the real damage can be done to homeowners in foreclosure. 9:279 minutes, 27 secondsSo, please stay with me here. After a list pendance is filed, you might get a call or a letter from someone offering to buy your house for cash. Fast close, no banks involved. No hassle. 9:399 minutes, 39 secondsWhen you're stressed and you're watching the calendar, that sounds like the answer to your problem. But here's what can happen with a lot of those situations. The person making the offer has no plans to buy your property. 9:509 minutes, 50 secondsThey're a wholesaler. And I want to be clear, wholesaling itself is a legitimate real estate strategy. It's legal. It exists in the market. But the 9:589 minutes, 58 secondsway it works matters, especially when the homeowner is looking at a foreclosure. 10:0410 minutes, 4 secondsHere's how the wholesaler's business works. They put your property under contract at a price that's typically below market value. Then they take that 10:1210 minutes, 12 secondscontract and they sell it or assign it to another buyer for a fee. That fee is their profit. Chapter 10: How wholesalers target homeowners in foreclosure 10:1910 minutes, 19 secondsThey were never planning to close on your house themselves. They were planning to just flip the paper. 10:2610 minutes, 26 secondsNow, when this happens in a normal market to a homeowner who isn't in trouble and who understands the deal, that's between those two parties 10:3410 minutes, 34 secondsinvolved. But when a homeowner is an active foreclosure, everything changes. And here's why. You're on a timeline. 10:4310 minutes, 43 secondsThe foreclosure process has deadlines. 10:4610 minutes, 46 secondsYour lender has deadlines. The court system has deadlines. Every week that passes is a week that you can't get back. 10:5510 minutes, 55 secondsSo, the wholesaler puts you under contract. You think you've got a deal. You might stop looking at other options. 11:0111 minutes, 1 secondMaybe turn away a real short sale conversation because you think the cash deal is going to close. Weeks go by, maybe a month, maybe two, 11:1011 minutes, 10 secondsand then the wholesaler can't find someone to assign the contract to, and the deal just falls apart. They just walk away. There's no consequences for 11:1811 minutes, 18 secondsthem, and they just move on to the next property. You don't get to walk away. 11:2311 minutes, 23 secondsYou're still in the same house and still in the same foreclosure, except now you lost time you didn't have. And in a 11:3011 minutes, 30 secondsforeclosure timeline, that time loss could be the difference between getting a short sale approved by your lender and watching your home go to auction. It's 11:3811 minutes, 38 secondsabout the time. And time is the one thing a homeowner in foreclosure doesn't have enough of. Now, there's two more things that you need to know about, and 11:4611 minutes, 46 secondsI'm going to explain them separately because they're different issues, but both of them matter. The first is the arms length requirement. And if you're 11:5411 minutes, 54 secondspursuing a short sale, your lender has to approve the contract. And lenders, including the big ones backed by Fanny May and Freddy Mack, require what's called an armslength transaction. 12:0512 minutes, 5 secondsSo, if a wholesaler puts your property under contract with assignment language and you're trying to get a short sale approved, you need to ask yourself 12:1312 minutes, 13 secondswhether that contract is going to meet your lender's arm length requirement. 12:1612 minutes, 16 secondsFrom my experience working these files, that's a question worth asking before you sign anything. The second is short sale flipping. This is separate from the 12:2512 minutes, 25 secondsarms length issue. The SFR certification program from the National Association of Realtors lists short sale flipping as a 12:3212 minutes, 32 secondsform of short sale fraud. That's not my opinion. That's straight from Freddy Mack's own fraud investigation unit quoted in the SFR training materials. 12:4212 minutes, 42 secondsShort sale flipping is when somebody buys a property through a short sale at a low price and then quickly resells it for the profit. Freddy Mack flags that 12:5112 minutes, 51 secondsas fraud because it usually involves some kind of manipulation to get the lender to accept a lower price than they should. That's why Fanny May and Freddy 12:5912 minutes, 59 secondsMack put deed restrictions on short sale properties. They block reselling the property within 30 days at any price. Chapter 11: Arms length transaction requirement 13:0613 minutes, 6 secondsAnd then they blocked selling it for more than 120% of the short sale price within 31 to 90 days. 13:1413 minutes, 14 secondsThose restrictions exist to prevent exactly this. So when a wholesaler approaches a homeowner in foreclosure 13:2113 minutes, 21 secondswith a below market offer and plans to assign that contract to someone else for a profit, you can see how those issues start to come into play. 13:3013 minutes, 30 secondsEither way, if you're facing foreclosure and somebody shows up with a cash offer, the right questions you need to ask, do they have proof of funds? Meaning, do 13:3913 minutes, 39 secondsthey have the actual money to close or are they planning to sign the contract? 13:4313 minutes, 43 secondsAre they the in buyer or is there assignment language in the contract? Chapter 12: Short sale flipping and Freddie Mac fraud flags 13:4713 minutes, 47 secondsWhat happens if they don't close? What's your backup plan? How much time will this take off the clock? Those questions 13:5613 minutes, 56 secondswill tell you whether you're dealing with a real buyer or someone who's using your situation to make a fee. Here's a list of warning signs. If you see any of 14:0414 minutes, 4 secondsthese, I want you to stop what you're doing and talk to an attorney before you move further anymore. An unsolicited contract right after a list pinions is 14:1114 minutes, 11 secondsfiled. They found you because you're filing this public record. That in of itself is not illegal, but it should make you ask right away, how did they 14:2014 minutes, 20 secondsget my name and what do they want? And who are they? A real professional will answer those questions straight up. A 14:2714 minutes, 27 secondsscammer will dodge or pressure you to keep talking to deflect. Your situation is serious. I won't pretend it isn't. 14:3314 minutes, 33 secondsBut a real professional will give you time to think, time to get advice, and time to read whatever you're asking them to sign. 14:4214 minutes, 42 secondsIf someone is rushing you, ask yourself why. Promises that sound too good to be true. If someone is making those guarantees, they're either misleading 14:5014 minutes, 50 secondsyou or they don't understand the process. You just heard what the law says about that. If they ask for money first, the answer should be no. Anyone 14:5814 minutes, 58 secondsask you to sign over the deed or the title? I said it before and I'll say it again. If someone asks you to transfer your title, stop. Leave. Call an Chapter 13: Warning signs of a scam 15:0715 minutes, 7 secondsattorney. That's the deal this entire law was built to prevent. Cash offers was assignment language and no proof of 15:1515 minutes, 15 secondsfunds. Read the contract. If it says andor assigns next to the buyer's name 15:2215 minutes, 22 secondsor if there's a clause allowing the buyer to assign the contract to another party, that's a wholesaler. And in a foreclosure situation, especially if 15:3115 minutes, 31 secondsyou're heading towards a short sale, the contract is going to raise questions with your lender. Ask for proof of funds. If they can't provide it, you 15:4015 minutes, 40 secondshave your answer. Now, I want to take a few moments to explain how what I do is completely different from everything I just described because I think the 15:4815 minutes, 48 secondscontrast matters. I think it helps you see the difference between someone working inside the rules and someone trying to work around them. When a 15:5615 minutes, 56 secondshomeowner comes to me with a distressed property situation, here's what I do. 16:0016 minutesFirst, we sit down and I look at the numbers. What do you owe? What is the property worth in today's market? What's 16:0716 minutes, 7 secondsyour money situation? what's the timeline, etc. I'm honest with you about the things and where you stand. If a 16:1416 minutes, 14 secondsshort sale makes sense, I'm gonna tell you it makes sense. If it doesn't, I'm going to tell you that also. I'm not going to pitch you on something that isn't right for your situation. 16:2616 minutes, 26 secondsNow, I'm going to walk you through a simplified version of how a short sale actually works. Every situation is different and every file takes its own Chapter 14: How a real short sale works 16:3416 minutes, 34 secondspath to get to a result. But in general, here's what happens. I list your property through normal real estate channels. And just like any other 16:4316 minutes, 43 secondslisting, a buyer comes in and makes an offer. That offer along with your hardship paperwork goes to the lender for review. The lender's loss mitigation 16:5116 minutes, 51 secondsdepartment looks at everything. The offer price, the property value, your hardship, the numbers. They either approve the short sale, come back with a 17:0017 minutesdifferent number, or we go back and forth until we get to a place that works. My partners and I, we handle the lender side. I also manage the listing and all the other real estate details. 17:1417 minutes, 14 secondsThere's a lot more to it than that, and no two files look the same, but that's the basic idea. Here's what I don't do. 17:2117 minutes, 21 secondsI don't charge you anything upfront. The bank pays my compensation at closing. 17:2617 minutes, 26 secondsYou, the homeowner, don't owe me a single dime. I don't take title to your property and I don't ask you to sign 17:3417 minutes, 34 secondsover the deed and I don't promise to save your home. I can't guarantee what your lender will decide. Nobody can. 17:4017 minutes, 40 secondsWhat I can do is work the process, put the file together the right way, present it to the lender the right way, and give you the best shot at an approval that 17:4917 minutes, 49 secondslet you sell, avoid a foreclosure judgment on your record, and move forward with your life. 17:5717 minutes, 57 secondsThat's standard real estate practice. 17:5917 minutes, 59 secondsIt's an armslength transaction. The bank approves the sale. The bank pays the compensation. The homeowner walks away without a foreclosure on their credit. Chapter 15: Who to contact and final disclaimer 18:1118 minutes, 11 secondsIt's the opposite of what the less scrupulous actors are doing. And the law I just spent the last few minutes walking you through, it exists to 18:1918 minutes, 19 secondsprotect you from the people who aren't doing it the right way. 18:2318 minutes, 23 secondsIf you received a list pendance or you know you're falling behind on your mortgage or you already have been contacted by someone and you're not sure 18:3018 minutes, 30 secondsabout what they're offering you, here's what I'd tell you. 18:3418 minutes, 34 secondsTalk to someone before you sign anything with anyone. Not after. Before get your questions answered, understand what 18:4218 minutes, 42 secondsyou're looking at and make your decision based on information, not pressure. 18:4618 minutes, 46 secondsYou don't have to air this out in public. The comment section below isn't where this conversation belongs. Reach out to me directly. Email me at 18:5418 minutes, 54 secondsjimarmmstrong94gmail.com or book a time on my calendar. I'll put the link in the description of this video. The conversation is free. It's 19:0319 minutes, 3 secondsprivate and there's no pressure. I'd rather you call me and find out a short sale isn't the right move than to not call me and [music] lose time that you can't get back. 19:1319 minutes, 13 secondsIf you're a real estate agent and you've got a client who's heading [music] into trouble or you're not sure what to do, reach out the same way. 19:2219 minutes, 22 secondsI handle the lender side, the paperwork, and the processing. I have a referral structure that makes it worth your time. 19:2919 minutes, 29 secondsIf this video helps you understand something you didn't know before, share it [music] with someone who might need it. That's how this information gets to the people it's meant for. 19:3819 minutes, 38 secondsOne last thing, and this is important. 19:3919 minutes, 39 secondsLike I said at the top, I'm not an [music] attorney and I'm not a CPA. 19:4319 minutes, 43 secondsNothing in this video is legal advice. I walk you through what the law says in [music] plain language, but I'm not your lawyer and I can't tell you what to do about your specific situation. 19:5419 minutes, 54 secondsIf someone has already asked you to sign something or you already entered into a deal that you're not sure about, talk to a Florida real estate attorney. 20:0320 minutes, 3 secondsThey can look at the details and tell you where you stand and advise you on your next step in a way that I legally cannot do. 20:1120 minutes, 11 secondsAgain, the statute number is Florida Statute 501.1377. 20:1720 minutes, 17 secondsThat's the Fore Rescue Fraud Prevention Act. Thanks for watching. I'll see you next time.