LOAN MODIFICATION (California)

Making the best decision for your situation requires you to know as much as you can (good, bad or indifferent) about all your options.  Loan Modifications may offer the right solution to your predicament.  There are fees that you will be required to pay.  One helpful hint is knowing that FEES are not allowed to be paid in advance.  If you intend to seek loan modification, remember that you can do this yourself and save a considerable amount of money by just being organized and diligent.

If you do decide to seek a real estate broker or an attorney, take a few minutes to ask them important questions regarding their FEES and LICENSING.  Then, go directly to the provided links on this page to verify that they are legitimate (amongst other things). 


What You Need to Know About Having a Licensed Real Estate Broker Handle Your Loan Modification

Real Estate Brokers must be licensed with the State of California Department of Real Estate (DRE), and you can verify their licensing status online.  In addition, check the business card of the individual you are discussing this with - if they do not have their license number on their business card, they may be operating out of compliance.  Brokers are required to have their FEE SCHEDULE approved by the DRE.   The DRE maintains a list that can be accessed online; if they do not appear on this list, it should be considered an immediate yellow flag.

BEWARE that there are brokers that are circumventing the system by referring and/or transparently referring consumers to attorneys, where they are receiving fees that are not monitored by the DRE.  Also, watch for CONSUMER ALERTS on companies / entities that are not licensed brokers with the DRE or practicing Attorneys with the State of California.  These are the 'LEAD SOURCE' businesses that are blanketing areas with mailers and cold calling.  If you are contacted by one of these entities, look at their fine print to see if they are licensed with the DRE or associated with a practicing attorney.  Since this is a gray area that is not overseen by the DRE or State Bar of California, it is not recommended that you make contact - and definitely refrain from paying them any money in advance.  Gov. Schwarzenegger signed Senate Bill 94, on October 11, 2009 that specifically addresses the issue regarding advance fees.  Refer to the section below titled:  New law prohibits advance fees for lawyers doing Foreclosure work. 

1. To access the California Department of Real Estate - Consumer Alert - Advance Fees and Loan Modification Services click the link below:  http://www.dre.ca.gov/cons_adv_fees_alert.html
   
   
2. Mortgage brokers that are complying with DRE should be listed on the following DRE web page:  http://www.dre.ca.gov/cons_adv_fees_list.asp
   
   
3. The DRE maintains a Desist and Refrain Orders and/or Accusations for Loan Modification activities; if the individual and/or entity is appearing on this list, it needs to be considered a yellow flag if not a red flag:
   http://www.dre.ca.gov/cons_drs.asp
   
   
4. Follow this link to the California Department of Real Estate and insert the name of the person with whom you are speaking to.  If they are listed, take a moment to verify their status; see how long they have been licensed; match that their broker is the same that they claim to be working for; and lastly, verify if they have had any disciplinary actions and/or suspension.
   http://www2.dre.ca.gov/PublicASP/pplinfo.asp
   
   
5. Utilizing the same link, insert the name of the company that they represent.  If they are listed, take a moment to verify their status; see how long they have been licensed; match that the 'agent' you are working with is included within their list of licensed sales persons; and lastly, verify if they have had any disciplinary actions and/or suspensions.
   http://www2.dre.ca.gov/PublicASP/pplinfo.asp

Retaining an Attorney For The Purpose of Loan Modification

New Law Prohibits Advance Fees For Lawyers Doing Foreclosure Work

Gov. Schwarzenegger signed Senate Bill 94 Oct. 11, immediately prohibiting any person, including attorneys and real estate licensees, from collecting an advance fee to perform foreclosure relief services. The new law, adopted as an emergency measure, closes a loophole that permitted foreclosure scam artists to exploit the ability to charge advance fees.

It is now unlawful for any licensed attorney or real estate agent “who negotiates, attempts to negotiate, arranges, attempts to arrange, or otherwise offers to perform a mortgage loan modification or other form of mortgage loan forbearance for a fee or other compensation paid by the borrower … to claim, demand, charge, collect, or receive any compensation until after the [attorney or agent] has fully performed each and every service the licensee contracted to perform or represented that he, she, or it would perform.”

The advance fee prohibition for loan modification and forbearance services applies to residential property containing four or fewer dwelling units.

The new law also requires the following written disclosure in at least 14 point bold type regarding loan modification and/or loan forbearance services prior to entering into any fee agreement with a borrower:

“It is not necessary to pay a third party to arrange for a loan modification or other form of forbearance from your mortgage lender or servicer. You may call your lender directly to ask for a change in your loan terms. Nonprofit housing counseling agencies also offer these and other forms of borrower assistance 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 your local HUD office or by visiting www.hud.gov.”

If loan modification or other loan forbearance services are offered in Spanish, Chinese, Tagalog, Vietnamese or Korean, a translated copy of the disclosure above must be given to the borrower in that language.

A violation of the law can result in fines and up to a year in jail.

*  This article was extracted from the California Bar Journal - November 2009.  Click here for the link.

If you are seeking legal representation, just remember that it's not required.  The State of California Bar Association makes it very clear on their website that attorneys practicing in the State of California can provide Loan Modification assistance.  Be advised that attorneys in California cannot call themselves and/or advertise as experts and/or certified - because the State of California does not provide any such designation.

The State Bar of California maintains a database of California attorneys.  Online public information from this database includes an attorney’s:

• Name
• Address
• Telephone and fax number
• e-mail address
• Date of admission to The State Bar of California
• Undergraduate and law schools attended
• Membership status (current eligibility to practice law in California)
• Public record of discipline