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.