News Alert – On October 11, 2009, Governor Schwarzenegger signed into law Senate Bill 94 which took effect right away upon his signature. This law now prohibits any individual, which includes real estate licensees and attorneys from demanding or collecting an advance fee from any consumer for loan modification or mortgage loan forbearance services affecting dwellings with one to four residences. Advance fees inadvertently collected soon after October 11, 2009 should be refunded. Agreements entered into just before October 11, 2009 are not affected and the below rules still apply to those prior agreements. If you already entered into an agreement with a licensed actual estate broker for loan modification or other mortgage loan forbearance services prior to October 11, 2009 and that broker had received a “no objection” letter from the California Department of Real Estate, they are permitted to continue supplying those services to you according to the terms of the contract. However, they are not permitted to collect any further advance fees from you. The California Department of Real Estate internet site states, “If you are approached by any person requiring up front fees for these services, do not pay them.”
Right now, everywhere you look, there are commercials, billboards and roadside signs by entities offering to help you prevent a foreclosure of your house. Known as Foreclosure Consultants, some, if not several of these services and the persons whom they employ might be acting in violation of the strict regulations in California which regulate this growing market. Other people, may be outright frauds and scam artists.
The focus of these foreclosure consultants is anyone who is behind on their mortgage payments, which is now estimated to encompass 1 out of each and every ten homeowners. Nonetheless, those who seek to defraud the public have their focus specifically on the elderly, the newly unemployed, those whose properties are entering foreclosure and those whose payments have recently spiked upwards.
If you’ve been the victim anywhere in Southern California of real estate fraud or the target of an unscrupulous loan modification service, foreclosure consultant or an individual acting on your behalf to modify your mortgage or cure your problems who is in violation of the strict regulations discussed in this article, call the Law Offices of R. Sebastian Gibson at any of the numbers on our internet site at http://www.SebastianGibsonLaw.com .
If you are a licensed actual estate broker or agent and have either been wrongly accused of becoming in violation of the laws and regulations governing loan modification services and foreclosure consultants, or acted as such without becoming aware of these strict regulations and want legal defense, we urge you to call us at any of the numbers which you can discover on our site.
To help you wade through the regulations in California on such services, here are some of the most essential regulations. Keep in mind, that there is some overlap between foreclosure consultants and loan modification services. For that reason, the laws and regulations governing both services are included.
California Civil Code Section 2945 regulates foreclosure consultants. There is an extra requirement with respect to loan modification services, as discussed below. As with numerous code sections, the restrictions are complex and several. But here are the main techniques in which foreclosure consultants and loan modification services are regulated.
First, no foreclosure consultant and no real estate licensee is allowed to collect any advance fees for services as a foreclosure consultant once a Notice of Default has been recorded against your property. California lawyers are exempt from this prohibition.
Second, even if a Notice of Default has not been recorded against your property, in order for a actual estate broker to assist you in obtaining a loan modification, or to otherwise negotiate a probable resolution to your problem, the broker must have you sign an agreement that specifically states what services will be performed, when they will be performed and how much you need to pay.
Third, a broker may not have you sign any such loan modification agreement until it has been submitted to the Department of Actual Estate for review and the broker has received permission from the DRE to use it and collect an advance fee.
Fourth, licensed actual estate brokers who offer loan modification services without collecting fees in advance are not necessary to receive the DRE’s permission so lengthy as their services are fully completed prior to they are paid by you.
Fifth, foreclosure consultant contract ought to permit the homeowner the proper to cancel the contract until midnight of the third enterprise day as defined in Section 1689.5 of the California Civil Code.
Sixth, foreclosure consultant contracts must provide an additional notice to the homeowner in 14-point boldface type stating when fees can be taken and notifying the homeowner that the consultant cannot ask you to sign any lien, deed of trust or deed.
Seventh, it is a violation for the foreclosure consultant to claim, demand, charge, collect, or receive any compensation until following the consultant has performed each and every and every single service the consultant contracted or represented he or she would perform.
Eighth, it is a violation for the foreclosure consultant to charge any fee or interest which exceeds ten percent per annum of the amount of any loan which the foreclosure consultant may make to the owner.
Ninth, it is also a violation for the foreclosure consultant to take any wage assignment, consideration from any third party, acquire any interest in the residence in question, take any power of attorney, induce the owner to sign other contracts which are not in compliance, or enter into an agreement to assist the owner to obtain surplus funds prior to 65 days soon after the trustee’s sale has been conducted.
Tenth, an action may be brought against a foreclosure consultant for any of these violations and judgment shall incorporate actual damages, reasonable attorney’s fees and costs, equitable relief and exemplary damage of at least 3 times the compensation received by the foreclosure consultant. The foreclosure consultant may also be punished by a fine of up to ,000.00 or imprisonment for up to a year or both for every violation.
The reason for these regulations are many. Foreclosure consultants have, in several circumstances, been found to charge high fees, require the payment to be secured by a deed of trust on the residence, and then have either performed no service or worthless services. Some foreclosure consultants have then been recognized to obtain the homes at a fraction of their worth shortly just before the homeowner loses their residence.
Furthermore, some foreclosure consultants have required payment of exorbitant fees for services such as to acquire the remaining funds from a foreclosure sale when the homeowner could have obtained those remaining funds from the trustee of a trustee’s sale directly for minimal cost if the homeowner had sufficient time to obtain notices from the trustee regarding how and where to make a claim for excess proceeds under Civil Code Section 2924j.
Amongst the services foreclosure consultants are identified to provide, legitimate or otherwise, are to stop or postpone foreclosure sales, acquire forbearances from beneficiaries and mortgage companies, assist in acquiring reinstated, acquire extensions of time, obtain waivers of acceleration clauses, assist in obtaining loans and advances, avoiding or ameliorating the impairment of the owner’s credit, saving the residence from foreclosure, and assisting in obtaining the remaining proceeds from the foreclosure of the residence. If a foreclosure consultant promises any of these services, he or she is bound by Civil Code Section 2945 discussed above.
If you are dealing with a loan modification service, even one with a contract which has been submitted to the DRE and the broker has received permission to use it and collect an advance fee, if the actual estate broker does not follow the strict procedures for handling the advance fee as contained in California Company & Professions Code Section 10146, the agent will be presumed to have violated Sections 506 and 506a of the Penal Code and the homeowner could recover treble damages for amounts misapplied and shall also be entitled to reasonable attorney fees in any action to recover those amounts.
Representatives of foreclosure consultants need to be bonded actual estate licensees. Foreclosure consultants need to also be bonded and registered with the California Department of Justice (and submit advertising and promotional materials) and the homeowner ought to be provided with written proof that the consultant’s representative has a valid California actual estate sales license, and is bonded in an quantity equal to at least twice the fair marketplace value of the property in question. If the foreclosure consultant performs any activities which contain negotiating loans or performing services in connection with real property loans, the consultant must also be a actual estate licensee.
Although actual estate agents are in some respects exempt from the foreclosure consultant regulations contained in Civil Code Section 2945, they are subject to it’s regulations under certain circumstances and it is in those circumstances that a actual estate agent can be in violation of the Act. If they collect fees once a Notice of Default has been recorded, if they collect advance fees just before acts have been performed, if they acquire an interest in a residence in foreclosure, if they assist the owner in obtaining the remaining proceeds from the foreclosure sale, or if they make a direct loan for a residence in foreclosure, they may possibly be in violation of the foreclosure consultant laws.
A actual estate broker cannot collect an advance fee under California Enterprise and Professions Code Section 10026 unless the broker has submitted to the California Department of Real Estate an advance fee agreement for approval.
A loan modification contract, even one with a licensed actual estate broker, for their help in working out a loan modification or negotiating an additional resolution of your difficulty need to still state what services will be performed, when they will be performed and exactly how considerably you ought to pay. If the fees are to be collected in advance, the contract should be pre-approved by the Department of Real Estate.
At the Law Offices of Sebastian Gibson, we specialize in the field of real estate and stand ready to assist you if you have been the victim of any kind of actual estate scam. If you have lost funds or your home to a foreclosure consultant or loan modification service as a result of their wrongdoing, we can assist you in pursuing the parties who victimized you and in some instances, we might be able to seek not only any moneys paid to them, but also, in some instances, your other actual damages, equitable relief, reasonable attorney’s fees and expenses and punitive damages of 3 times the compensation received or misapplied by the foreclosure consultant or loan modification service who contracted with you.
If you have a organization or actual estate legal matter in Palm Springs or Palm Desert, in Ontario or Rancho Cucamonga, Temecula or Murrieta, Newport Beach or Huntington Beach, Anaheim or Santa Ana, El Cajon or Carlsbad, Palmdale or Victorville, Long Beach or Santa Monica, Ventura or Oxnard, or anywhere in Southern California, our Palm Springs, San Diego, Orange County, Inland Empire, Los Angeles, Santa Barbara and San Luis Obispo law firm has the understanding and resources to be your Business Lawyers and Actual Estate Attorneys. If you’ve been the victim of a real estate, company, loan modification or foreclosure scam or fraud, be sure to hire a law firm with expertise in loan modification, foreclosure and actual estate fraud in California and who will endeavor to make sure that your rights are effectively represented.
To learn far more about the statutes which regulate loan modification and foreclosure consultants, or for legal representation, call the Law Offices of R. Sebastian Gibson at any of the numbers on our internet site at http://www.SebastianGibsonLaw.com .