The Gloucester County Times – Legislation aimed at protecting homeowners from foreclosure rescue scams by unscrupulous lenders has been signed into law.
The new law — whose sponsors include Assemblyman John Burzichelli, D-Paulsboro — will require foreclosure consultants and distressed property purchasers, who contract with owners of residential properties in financial distress, to adhere to certain practices in providing foreclosure prevention services to owners.
The law requires a foreclosure consultant to post a bond with the Department of Banking and Insurance before conducting any business in the state. In addition, the law provides contract rights for owners of a financially distressed residential property who contract with foreclosure consultants, including requirements that:
• The contract for foreclosure consulting services must be in writing and must contain certain disclosures and notice requirements in 14-point boldface type; and
• The owner has a right to cancel the foreclosure consulting contract at any time until after the foreclosure consultant has fully performed every service and secured the relief the consultant contracted to perform.
The law also prohibits foreclosure consultants from collecting any fee prior to the completion of all agreed upon services and until the distressed property relief is secured; and collecting fees in excess of certain limits as prescribed in the bill.
In situations in which there is a distressed property conditional conveyance (when an owner transfers the distressed property to a distressed property purchaser, occupies the property, and retains an option to purchase the property back from the purchaser) or a distressed property conveyance (when an owner simply transfers the distressed property to a distressed property purchaser) the law provides certain contract rights to owners, including requirements that:
• The contract be in writing and include certain notices and disclosures in 14-point boldface type; and
• The owner has a right to cancel the contract during certain periods.
In regards to the conditional conveyance of distressed properties, the law places certain obligations on distressed property purchasers, including requirements to:
• Verify that the owner has a reasonable ability to pay for a subsequent conveyance of title back to the owner;
• Provide to the owner, prior to conveyance, a disclosure statement that includes all costs the owner will incur in connection with the conveyance and any option for the owner to purchase the property back from the purchaser.