Advance fee agreements.  If you are a California licensed real estate broker, you have probably heard by now that if you want to get in the game and do loan modifications (you should make sure you are in it for the right reasons - to help homeowners), and if you intend to collect an advance fee from your clients and borrowers, you must have a DRE APPROVED ADVANCE FEE AGREEMENT.  Actually, the proper terminology is that you must have a contract that has been submitted to the California Department of Real Estate Commissioner and they must issue the broker what's called a letter of non-objection".  Which essentially is the approval you seek so that you can officially engage in the loan modification business in California and legally collect an advance fee agreement from your potential clients.

I would like to point out a few tips and tricks to the "do-it-yourselfer" who would like to try to get his or her advance fee agreement approved for use by the DRE.  I have submitted over a dozen of these myself and I have received much feedback from the DRE representatives. These are but a few of the secret advance fee agreement tips I will share with you.  There is also a free version of the advance fee agreement on the DRE website.  Many of my Clients prefer to have a custom agreement drafted but fee free to contact us to discuss your needs.

HOW DO YOU GET AN ADVANCED FEE AGREEMENT APPROVED?  HERE ARE SOME HELPFUL TIPS:

(Advance Fee Agreement FAQ's)

(1) Make sure you read the California DRE's guideline sheet on advance fee agreements.  You can find a copy of AFA tips here:  Essential Elements of an Advanced Fee Agreement: www.dre.ca.gov/pdf_docs/mlb_essential_elements.pdf

(2) Once you are confused exactly how to put together and submit your advance fee agreement after readong that AFA guideline sheet here are a few more tips that you will not find on the advance fee agreement sheet put out by the DRE:

• Make sure to have signature blanks for both the broker and the Principal.  Both parties need to sign the advance fee agreement.  I tried to submit an advance fee agreement with the salesperson name on it and it was sent back to me.
  
• Make sure every aspect of your advance fee agreement (AFA) is in 10 point font.  If there is even one tiny thing less than 10 point font your agreement will surely be rejected.
  
• Make sure your advance fee agreement allows for spaces to include the lender(s) name, address, and loan amount and account number.  These are items I have seen the DRE ask for
  
• You should have a siganture block for the broker to sign.
  
• Make sure your mandatory disclosures are bolded.  If you do not bold the required disclosure, your advance fee agreement will surely be rejected
  
• Make sure your ADVANCE FEE AGREEMENT has a spot for the Broker's Trust account.  If you are collecting an advance fee for loan modifications in California, you must have both an advance fee and a verified accounting format (this is a tricky topic as well and not really covered in the DRE advance fee agreement guidelines - it's sort of like a bigfoot sighting to get this done right (you never see much out there to help you).
  
• Make sure to include any advertising materials you plan to use with your advance fee agreement submission to the DRE.  Otherwise, you will waste time in having to go back and get this approved.
  
• Try to use short, clear and understandable language.  You do not want to become too confusing such that the commissioner's office has no idea what you are talking about
  
• Likewise, your advance fee agreement should not be overly vague or ambiguous.  This is a contract after all.
  
• The Principal must have the right to cancel the advance fee agreement and receive a return of any unused (unearned) amounts of money. Do not try to circumscribe the Principle's right to obtain a refunf of the advance fees held in the client trust account.
  
• Make sure your advance fee agreement provides that the Principal will recieve an accounting each calendar quarter and at the conclusion of the representation.  Their is a California Civil Code Section that every Broker must comply with when rendering a verified accounting in an attempt to convert the advance fee into an earned fee.  Since I am in the cheerful mood, here is a link to California Business & Professions Code Section 10146: http://www.leginfo.ca.gov/cgi-bin/waisgate?WAISdocID=256130156+0+0+0&WAISaction=retrieve

          Since it is nearing the holidays and most people are too lazy to click on that link to learm more about the verified accounting process and procedure in regard to the advance fee agreement, I will provide you the actual text of California Business & Professions Code Section 10146

 10146.  Any real estate broker who contracts for or collects an
advance fee from any other person, hereinafter referred to as the
"principal," shall deposit any such amount or amounts, when collected
in a trust account with a bank or other recognized depository.  Such
funds are trust funds and not the funds of the agent.  Amounts may
be withdrawn therefrom for the benefit of the agent only when
actually expended for the benefit of the principal or five days after
the verified accounts mentioned hereinafter have been mailed to the
principal.  Upon request of the commissioner, a broker shall furnish
to the commissioner an authorization for examination of financial
records of the trust account in accordance with the procedures set
forth in Section 7473 of the Government Code.
   The commissioner may issue such rules and regulations as he deems
necessary to regulate the method of accounting, and to accomplish the
purpose of the provisions of this code relating to advance fees
including, but not limited to, establishing forms for and determining
information to be included in such accountings.  Each principal
shall be furnished a verified copy of such accountings at the end of
each calendar quarter and when the contract has been completely
performed by the licensee.  The Real Estate Commissioner shall be
furnished a verified copy of any account or all accounts on his
demand therefor.
   Where advance fees actually paid by or on behalf of any principal
are not handled in accordance with the preceding paragraph, it shall
be presumed that the agent has violated Sections 506 and 506a of the
Penal Code.  The principal may recover treble damages for amounts so
misapplied and shall be entitled to reasonable attorneys' fees in any
action brought to recover the same.

 So there it is, the verified accounting rule for the advance fee agreement.  Bigfoot has left the building!

Have fun with it.

Some other final tips to help you get your advance fee agreement approved ("letter of non-objection")

 (1) On the verified accounting, make sure you provide the trust account information (bank name, branch, address, phone number, account number)

(2) On the verified accounting make sure you identify the Principals and their advance fee agreement funds balance.

 (3) make sure the broker has the proper attestation/verifaction clause to sign off on the work done that broker is claiming the advance fee for.

These are a good portion of the comments I have received in trying to get these advance fee agreements approved.  If you want to be the draftsman and wordsmith and try your hand at getting your ADVANCE FEE AGREEMENT APPROVED BY THE DRE, by all means go for it and have fun with it.  It can be frustrating going back and forth and you may lose some time when you could be out selling and actually making money helping people.  If you want to cut to the chase and get an advance fee agreement that has been approved with a letter of non-objection contact me today.  I will give you a fantastic price and submit your agreement usually within the same day that I process payment.

HOW LONG DOES IT TAKE FOR A CALIFORNIA BROKER TO GET AN ADVANCE FEE AGREEMENT APPROVED?

I get this question alot -  it depends how busy the DRE is. 

IF YOU WANT TO GET STARTED NOW GIVE ME CALL.  BEWARE THAT LIKE EVERY OTHER ASPECT OF THE FORECLOSURE PREVENTION/LOAN MODIFICATION BUSINESS THERE ARE UNDOUBTEDLY SCAMMERS OUT THERE CLAIMING TO HAVE AN APPROVED ADVANCE FEE AGREEMENT AND COPY OF THE VERIFIED ACCOUNTING.  BEFORE YOU TAKE YOUR CHANCES, CONTACT A LICENSED ATTORNEY TO ASSIST YOU IN THIS ENDEAVOR.

THE LAW OFFICES OF STEVEN C. VONDRAN WILL GIVE YOU A LOW PRICE ON THE ADVANCE FEE AGREEMENT THAT IS REQUIRED OF ALL BROKERS IN CALIFORNIA who seek to perform loan modifications and accept an advance fee:

Call us Toll Free: (877) 276-5084

California Office: 620 Newport Center Drive, Suite 1100, Newport Beach, CA 92660
Arizona Office: 2415 E. Camelback Road, Suite 700, Phoenix, AZ 85016

Mr. Vondran is a licensed Attorney in both California and Arizona.  He also holds a Brokers license in each state.

PS.  Here are some tips on handling trust accounts by California Brokers. (DRE Trust Account Rules)

www.dre.ca.gov/pdf_docs/re13.pdf

Also, Here is a posting of a previous blog article I did on the California Broker Advance Fee Agreement in case you missed it:

California Loan Mod Brokers....If you are accepting an advance fee you MUST have a DRE Approved Advance Fee Agreement!!! Attorney Service

APPROVED ADVANCE FEE AGREEMENT:  Attention California Real Estate Brokers.  Are you accepting an advance fee from your client when pitching your loan modification services?  If so, make no mistake you need to have an advance fee agreement approved by the California Department of Real Estate Commissioner.  This means you must receive a letter of on-objection.

There are no exceptions to this rule unless by chance you are a broker and a California Attorney.  Attorneys may perform loan modifcations subject to certain rules.

Note: Even if you are doing what a lot of brokers are doing which is to offer "100% money-back guarantee" this is still collecting an advance fee and the DRE reserves the right to conduct an audit of your business and to disscipline violators of the advance fee rule.

Why put in jeopordy a license you have worked so hard for?  Get in compliance today.

MY FIRM OFFERS AN APPROVED ADVANCE FEE AGREEMENT THAT YOU CAN LICENSE.  THIS AGREEMENT, ALONG WITH THE VERIFIED ACCOUNTING HAS PASSED THE DRE REVIEW PROCESS.  YOU SHOULD PROBABLY BE AWARE THAT THERE ARE ONLY A LIMITED NUMBER OF CALIFORNIA BROKERS (as of this writing) WHO HAVE AN APPROVED ADVANCE FEE AGREEMENT.  CLIECK HERE TO SEE WHAT I MEAN:

http://www.dre.ca.gov/mlb_adv_fees_list.html  (the List is growing literally every day and brokers who are willing to work hard to do the right thing for the homeowner may find this a challenging field of practice).

We submit THE APPROVED ADVANCE FEE AGREEMENT.  Modifications may be requested by the DRE (although being that this advance fee agreement has been pre-approved this should not be the case),  but if so, we will FEDEX in any materials or changes we need to get you going.

Basically and advance fee agreement outlines how your loan brokerage will operate and how fees will be earned, this agreement gets reviewed by the DRE commissioner.  You tell them what services you provided, what you charge for doing the particlular services and when you commit to doing them.  You also need a trust account setup and need to understand verified accounting prusuant to the California Business and Professions code.  Also make sure to have the proper consumer disclaimers and disclosures and you are set.  If you can handle this, you don't need me.  If not, give me a call and let's talk.  I make the advance fee agreement process quick, easy to understand and efficient.

I provide you with a copy of the advance fee agreement before I submit it to the DRE.  This is the very agreement as broker, you and your salespersons will use with your loan modification clients. 

For more details contact me at Law Offices of Steven C. Vondran (877) 276-5084.  Attorney Steve Vondran is licensed in California and Arizona. 

IF YOU ARE GOING TO DO LOAN MODIFICATION BUSINESS IN CALIFORNIA AS A BROKER, YOU NEED AN APPROVED DRE ADVANCE FEE AGREEMENT. 

California Address:
620 Newport Center Drive, Suite 1100
Newport Beach, California, 92660.

 Because most of our California loan modification and loan auditing work can be done, and is done, by phone fax and email between us and you and us and the relevant Calfiornia governmental agencies, we are able to serve our California clients in the following California Counties and Cities

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