Notice of Foreclosure

There has been many companies doing loan modifications, including attorneys, who have taken advance fees to do a loan modifications.  Fees have ranged up to over $5,000, with the families facing foreclosures getting nothing in return. Now, California has passed a bill in which anyone, including attorneys, cannot collect up front fees.

As an example of what has happened, the California Department of Real Estate is currently investigating over 1,300 loan modification complaints and, in just the past 12 months, has issued nearly 400 desist and refrain orders and accusations against individual respondents for Illegally collecting advance fees. Most of the cases involve a scammer who has collected an advance fee in exchange for a promise that the homeowner will receive a sustainable loan modification; yet once the fee was paid little or nothing was done to get the borrower’s loan modified. A list of persons and companies that the Department has taken action against can be found at Department of Real Estate.

Senate Bill 94 goes right to the heart of the fraud. The measure prohibits any person, including real estate licensees and attorneys, from demanding, claiming, charging, collecting or receiving an upfront fee from a borrower in connection with a promise to modify the borrower’s residential loan or to do some otherform of mortgage loan forbearance. The advance fee prohibition for loan modification and forbearance services applies to residential property containing four or fewer dwelling units.

Furthermore, Senate Bill 94 applies to anyone in California performing loan modification services as well as to those outside of California who offer these services to California consumers. It also mandates any person performing loan modification services for a fee to disclose to the borrower that similar services are available from approved non-profit housing counselors free of charge.

A list of nonprofit housing counseling agencies approved by the United States Department of Housing and Urban Development (HUD) is available from the local HUD office or by visiting Hud Office

Those individuals and entities not in compliance with the provisions of SB 94 should be reported to the Department of Real Estate. Generally, before an individual or company may lawfully perform loan modification services they must obtain a license from the Department of Real Estate or be licensed as an attorney acting within the scope of his or her license. Consumers can get information on how to file a complaint or may check the license status of a company or individual by going to the Department’s web site at Department of Real Estate.