Loan Modifications - Can we Charge a Fee?

By
Real Estate Broker/Owner with KD Realty - 408.972.1822 CA BRE#01366594

I received an interesting call today.

Caller: “We are a very small business helping people with loan modifications. Can we charge a fee?”

Me: While I do not remember the exact date, I know it was well over one year ago, Governor Schwarznegger signed Senate Bill 94, making it illegal in California for any licensed or unlicensed persons to charge any upfront fees for loan modification services or other form of mortgage loan forbearance. When the Governor signed Senate Bill 94 the legislation took effect immediately.

Caller: “Well, we are basically a credit repair company. Can we charge a fee?”

Me: The authority here is the law … not me or the brokerage. I suggest you go to the DRE website and search “loan modification” … it’s a pretty hot subject. I’m sure you will find the legislation and other helpful information. It is illegal in California to charge advance fees for loan modifications.

Caller: “What was the name of that site again?”

Me: California Department of Real Estate … www.dre.ca.gov. In the upper right hand corner search the site for loan modification. I am sure you will find all of the guidelines and disclosure requirements. Again, I am not the authority. I only know it is illegal to charge upfront fees.

Caller: Thank you. I appreciate your help.

I did a cross search on the phone number. The call came from a credit counseling and mortgage company in Benicia, CA. Like I said, I received an interesting call today.

The Great Pretenders! 

If anyone in the State of California offers you loan modification assistance and they ask to collect money or fees upfront, report the violation to the California Attorney General and to the California Department of Real Estate. It is illegal in California to charge up-front fees for loan modification services or other form of mortgage loan forbearance.

Kathleen Daniels, San Jose Homes for Sale | San Jose Short Sales

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Topic:
Lending / Financial
Location:
California
Groups:
Legal Aspects of Short Sales, Foreclosures, Loan Mods
CALIFORNIA REAL ESTATE
California Short Sales, REO's, and Foreclosures
Short Sales Pre Foreclosures Bankruptcy and More!
"Whacked"!!!
Tags:
loan modification
california law

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Rainmaker
706,255
Juli Vosmik
Scottsdale/Cave Creek, AZ real estate 480-710-0739
Dominion Real Estate Partners, LLC, Scottsdale, AZ

Kathleen - excellent blog.  I thought I was illegal in the entire United States, but for sure it is here in Arizona, as well.  I've suggested this for a feature because the word needs to get out to more homeowners.  There are still unscrupulous companies out there calling it by "different" names, but still getting away with charging fees.  It's disgusting.  Great job for knowing where to refer them. 

June 14, 2011 08:40 PM
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1,234,079
Kathleen Daniels
San Jose Homes for Sale - Probate Specialist
KD Realty - 408.972.1822

Juli, We never know who is on the other end of our phone. There was something so odd/strange about the call. She sounded like she was clueless about the California Deparment of Real Estate. I refrained from disclosing the company name and phone number ... just wanted to get the word out that upfront fees are illegal.  You may be right ... it may be nationwide.  Thanks for the Suggest - very nice of you.

June 14, 2011 08:56 PM
Rainmaker
245,315
John M. Scott
Broker / Owner San Francisco Bay Area
BRE # 01442690, Scott Keys Properties

Kathleen, what an amazing call. We used to have an 800 number and got all sorts of crazy calls. Ready weird stuff, and not worth the 800 cost. Most people use cell phones these days anyway.

It is amazing the calls and letters homeowners get. I've seen a lot of letters - its amazing what people will tell homeowners......and many patently illegal. However, I have seen letters from BofA investors offering a loan mod for an upfront fee. One of my short sale clients did follow thru with that and got a loan mod that worked for them. Of course I lost the short sale.

June 14, 2011 10:14 PM
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1,234,079
Kathleen Daniels
San Jose Homes for Sale - Probate Specialist
KD Realty - 408.972.1822

John, It is amazing that people continue to do what they can to make a buck under the premise of “helping people” and try to find ways around the laws to do it! Some don’t even bother to find ways around the laws … they will scam and sell their mother for a dime! Thanks for your comment.

June 14, 2011 10:27 PM
Rainmaker
278,343
Melanie Ross
Benicia CA & Vallejo CA Real Estate, 707-319-2828
Coldwell Banker Solano Pacific

Kathleen, very scary.....Benicia is my hometown!

June 14, 2011 11:34 PM
Rainmaker
238,353
David Ames
San Francisco
Zephyr Real Estate, San Francisco

You're right Kathleen, that really was a strange call...almost as if they were "testing" you for the right answer.  "Can we charge a fee?"  Hmmm...a little suspicious to say the least. 

June 15, 2011 01:06 AM
Rainmaker
238,346
Peggy Hughes
SF NYC LA
PHA/Peggy Hughes Associates - Professional Moving Organizer

You certainly did the right thing Kathleen, providing information where these folks could go to get the correct information... on another note, even tho I was the personal insurance broker for Eddie Mercury's drummer, I've never seen this rendition of the old Pretenders song... thanks for sharing!

June 15, 2011 01:31 AM
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1,234,079
Kathleen Daniels
San Jose Homes for Sale - Probate Specialist
KD Realty - 408.972.1822

Melanie, I thought of you when I realized the company was located in Benicia. Thanks for stopping by.

David,  I get a lot of random calls on my 800 # ... sometimes I do feel tested. It's bitter-sweet. People are finding me on the Internet - yet some of the calls are bizarre. Thanks for your comment.

Peggy, Oh my goodness. We just keep learning more and more about you.  That song popped into my head after I hung up the phone ... so off to YouTube to find the song!  Thanks for your comment.

June 15, 2011 11:05 AM
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