Loan Modification Scams – No More!

October 19, 2009

For Realtors, Loans & Mortgages

Loan Modification Law Enacted –   On October 11, 2009 Governor Schwarzenegger signed Senate Bill 94 (Calderon), and the legislation took effect immediately upon his signature. Thus, California law now prohibits any person, including real estate licensees and attorneys, from demanding or collecting an advance fee from a consumer for loan modification or mortgage loan forbearance services affecting 1 – 4 unit residential dwellings.

IF YOU ARE A REAL ESTATE BROKER, OR THE DESIGNATED OFFICER OF A LICENSED CORPORATION, WHO HASNo Fee Loan Modification and No Fee Mortgage Loan Forebearance BEEN ISSUED A “NO OBJECTION” LETTER BY THE DEPARTMENT OF REAL ESTATE FOR LOAN MODIFICATION OR OTHER MORTGAGE LOAN FORBEARANCE SERVICES, YOU CAN NO LONGER ENTER INTO THESE AGREEMENTS EFFECTIVE AS OF OCTOBER 11, 2009, NOR CAN YOU COLLECT ANY ADVANCE FEES FOR SUCH SERVICES.

Agreements entered into and advance fees collected prior to October 11, 2009 are not affected. Advance fees for loan modification or mortgage loan forbearance services inadvertently collected after October 11, 2009 must be fully refunded.

All real estate licensees should become familiar with the provisions of SB94 as there are substantial administrative and criminal penalties for violations.

For No Up Front Fee loan modification services, please visit www.LoanMods2009.com, a company that has NEVER charged advanced (up front) fees for loan modifications.

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4 Responses to “Loan Modification Scams – No More!”

  1. Megan Says:

    I think this legislation will cause even more foreclosures down the line because home owners can’t do the negotiations themselves and no upfront fee companies will go out of business because the process takes way to long to keep a business going. You might see some gov’t agencies filling the void but without monetary motivation, why would anyone do a good job?

  2. Angella Says:

    Megan,
    I agree these many of the loan modification companies will probably go out of business immediately. But let’s be honest – as an investor, I want the foreclosure rates to go up, and I want more properties to be available for me to purchase. Besides, 80% of the current loan modifications go back into default within 6 months anyway, so as long as the principal is not being reduced – loan modifications are useless.

    And I don’t want the banks to start reducing principal, as part of the loan modification, either. As far as I am concerned – these borrowers signed a contract and that’s the end of it. If they can’t make the payment, they get foreclosed on. Nobody is bailing out people who worked hard for their down payments and who qualified for a loan legitimately, or who lost money in the stock market. So why bailout people who lost money in their home equity? Not fair!

    I wish the government would just stay out of private business and let the economy take it’s natural course. Last time a President tried fiddling with the economy, the Great Depression lasted until WWII.

  3. Greg Malner Says:

    I am a real estate agent, and I visit many people that are in trouble with their mortgages. Most are attemtping to do a loan modification due to the fact that getting a loan modification is in most cases the BEST OUTCOME for consumers. Unfortunately, the truth is that many are still paying upfront fees, even after SB94 has passed! Even worse only a small percentage of those consumers meet the criteria to do a loan modification (Currently employed, 31% front end mortgage to income ratio). Yet, they have been lead to believe that a loan mod is possible. Consumers can do their own loan mod. In most cases the same documentation needed to secure a loan are the same docs requried for a loan mod. They really need to take ACTION and talk with their lending institution(s).

  4. Angella Raisian Says:

    Greg, I agree with you. At this point I’m advising my clients to just negotiate their own loan mods. I tell them the criteria for qualifying, as you listed above, and set them loose :-)

    Angella Raisian
    .-= Angella Raisian´s last blog ..Government & Bank REO Websites =-.

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