Crist signs bill to curtail mortgage fraud

Tallahassee, Fla. – June 20, 2007 – In 2005, Florida ranked No. 1 in mortgage fraud, over two times higher than the national average. But the rules will change Oct. 1, 2007, which a new law – signed yesterday by Gov. Charlie Crist – tightens lending rules. “The new law makes the mortgage lending process more transparent,” says Trey Goldman, FAR legislative counsel. “It also impacts buyers, sellers and real estate licensees who may be trying to commit mortgage fraud.”A person – including real estate licensees – commits real property fraud if he or she knowingly lies, misrepresents or omits material information that the lender or another party in the transaction would rely on in the mortgage lending process. The legislation is based on laws adopted in Georgia and other states.The new law, S.B. 1824, mandates the following: • Mortgage brokers and lenders must give borrowers detailed disclosures for loans, including variable rate loans (ARMs). • Borrowers must be told how much a lender pays a mortgage broker, and it must be in writing.• Good faith estimates must be signed and dated by the borrower, and disclose the “recipient of all fees charged.” The law allows the fees to be disclosed in generic terms.• If a loan’s terms change, the borrower must be notified no later than three business days before closing. The mortgage licensee must be able to prove that the notice was provided and that the borrower accepted the new terms. • The Florida Office of Financial Regulation may take an enforcement action against mortgage brokers and mortgage lenders who violate the federal Real Estate Settlement Procedures Act (RESPA) or the federal Truth-in-Lending Act. © 2007 FLORIDA ASSOCIATION OF REALTORS®