Inland Valley Financial

Effective October, 2009 in California, it is illegal to collect any fees, regardless of the form, for negotiating or attempting to negotiate a loan modification for a residential mortgage. All modification services must be fully completed before any money can be collected. It is also illegal to divide fees or services into components for the purpose of avoiding this law.

HUD approved housing counseling agencies are exempt from this law. For businesses outside of California, please check with the agency that regulates this industry.

California Law requires Foreclosure consultants to be registered with the Department of Justice and bonded, to check for registration visit http://ag.ca.gov/loanmod/search_results.php. If they are not, they are subject to criminal prosecution. Homeowners should know that, by law, they have five business days after the date of the transaction to cancel for any reason, with no penalty or obligation. If your contract does not inform you of this, you may cancel it at any time.

California law generally prohibits collecting money before completing loan modification. Exceptions are licensed law firms (that is, bona fide law firms, not just a firm claiming to have attorneys on staff) and real estate brokers who have registered their agreements with the California Department of Real Estate. You can find a list of those with registered agreements at http://www.dre.ca.gov/mlb_adv_fees_list.htm.

We advise you not to rely solely on registration or licensing to determine the reliability of a loan modification company, though. Despite the law’s protections, if you are not dealing with a reputable company, you will find it difficult to enforce your rights. You should investigate the background and worthiness of any company offering to provide you with these services.