Loan Modification Scams – No More!
This new loan modification legislation in California, which prevents anyone from charging up-front fees, signals a big change to come in the foreclosure arena. 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 and a business cannot afford to keep the business going while waiting for the first batch of loan mods to payoff–if they payoff. I’ve been doing No-Upfront Fee Loan Modifications since January but have closed very few files due to the bank’s backlog and their current strategy for making a delinquent home owners make 3 months of good-faith payments before considering a modification. That’s a long time to go without a paycheck and still have overhead. Most negotiators are out of time & patience. You might see some gov’t agencies filling the void but without monetary motivation, why would anyone do a good job? Anybody else have any ideas on this topic? Thanks for stopping in. Peace, MeganAngella Raisian presented this on her blog www.AngellaRaisian.com
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 HAS
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.
Tue, Oct 20, 2009
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