Financial Investments Solutions, Inc.

In California, a real estate broker license is required to conduct loan modification activities unless exempt under the Foreclosure Consulting Law, or an attorney doing loan modifications within his/her normal practice. Many loan modification companies are attempting to circumvent the licensing law by finding an attorney who will loan their name to give the impression that an attorney or law firm will be handling the modification. In addition, any broker who accepts an advance fee for a loan modification must have obtained a “no-objection” letter from the DRE prior to doing so. A list is published on the DRE website of the companies who have already obtained this approval from the Department.

Keep in mind, 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.

A loan modification contract, even one with a licensed real estate broker, for their assistance in working out a loan modification or negotiating another resolution of your problem must still state what services will be performed, when they will be performed and exactly how much you must pay. If the fees are to be collected in advance, the contract must be pre-approved by the Department of Real Estate.

Licensed real estate brokers who provide loan modification services without collecting fees in advance are not required to receive the DRE’s permission so long as their services are fully completed before they are paid by you.