How to Prevent Surplus Fund Scams

If your home was recently foreclosed on, you may be surprised to discover that surplus funds are available after the foreclosure sale and that those unclaimed foreclosure funds belong to you. If you’ve been contacted by someone offering to help you claim those funds, those funds may very well be legit. However, the person contacting you may not have your best interest in mind. Surplus funds scams target people in your position, and they aim to get their hands on your money.

What Are Surplus Funds?

Surplus funds happen when would-be buyers at an auction submit “upset bids” that drive the price up unexpectedly. When this occurs, the house can end up selling for more money than you still owe. As these surplus funds represent your equity, they belong to you.

Common Types of Surplus Fund Scams

Scammers will try to take advantage of your stress and your need for money by getting you to sign a document that gives them the right to collect your surplus funds. If you sign that document, you will only be paid a small portion of what you are owed.

Common types of surplus fund scams include:

• Charging high fees to file paperwork that you can file yourself
• Charging a low fee upfront but an unreasonably high fee once you’ve submitted the paperwork
• Asking for a retainer to represent you
• Offering access to a site that lists surplus funds for a fee, even though this information is publicly available

Red Flags to Watch Out For

Red flags indicating a possible foreclosure surplus funds scam include:

• High-pressure sales tactics
• Limited time to decide whether to claim surplus funds
• Asking you to sign documents you don’t understand
• High fees for surplus funds recovery

Florida Laws on Surplus Funds

According to Florida law, surplus funds from foreclosure belong to the person who owned the property before the foreclosure sale. To collect your surplus funds, you must fill out the “Owner’s Claim for Mortgage Foreclosure Surplus” form and file it with the court clerk. You must also submit evidence showing you were the homeowner on the foreclosure date.

A scammer can attempt to prove that you assigned your rights to them, but under Florida law, the burden of proof is on the person trying to collect the money.

Rights of Property Owners

Your rights as a property owner in a surplus funds case include:

• The right to collect any surplus funds from the foreclosure sale
• The right to assign your rights to someone else to collect the funds, if you do so in writing according to the terms set out by Florida statute

Anyone who collects your surplus funds for you is entitled to no more than 12 percent of the total as compensation for their services. Scammers may charge as much as 75 percent.

Contact Our Attorneys for a Free Consultation

Foreclosure is a stressful process for everyone who goes through it. To avoid surplus funds scams, don’t sign any document you don’t completely understand and never agree to pay more than the 12 percent allowed by law.

For help with your foreclosure or claiming surplus funds, trust a debt solution law firm with a proven record of success. The team at Loan Lawyers will provide the support and peace of mind you deserve. Contact us today for a free consultation.