Interest Rate Mediators, Inc.

Financially distressed homeowners continue to fall prey to pervasive loan modification and foreclosure rescue companies. These companies promise timely and helpful modification services, collect monies up front, but perform no valuable services and simply pocket the monies. Despite claims to the contrary, these companies do not have affiliations with any government agency or any special relationship with your mortgage company. Nor do they, as they may imply, have the ability to obtain more lenient repayment terms than you may be able to obtain yourself by contacting your mortgage company directly.

California law generally requires that no person or entity may collect money in advance of completing loan modification. Some exceptions are licensed law firms, meaning the business is a bona fide law firm and not a firm claiming to have attorneys on staff. (To verify the status of a California law firm visit http://members.calbar.ca.gov/search/member_adv.aspx.) Also excepted are licensed California real estate brokers who have properly registered their agreements with the California Department of Real Estate (DRE). (A list of those who have registered their agreement with the DRE is located at http://www.dre.ca.gov/mlb_adv_fees_list.html.)

In addition, as of July 1, 2009, the California Foreclosure Consultant Act was enacted to safeguard the public against deceit. With few exceptions, like those described above, it is now illegal to operate as a foreclosure consultant in California without completing registration and bonding requirements. Foreclosure consulting companies must register with the Justice Department, and post a $100,000 bond with the secretary of state for a period of two years. If the company violates the law, a court may order restitution to victims out of proceeds from the bond. Companies who fail to comply will be subject to criminal penalties of up to a year in jail and fines ranging from $1,000 to $25,000 per violation. Additionally, The Act also affords consumers a 5 day rescission period to cancel contracts without penalty or obligation, and requires the companies to have a pre-printed cancellation notice, along with instructions for cancellation included with the contract. Contracts must also be in writing, and provided in the language requested by the homeowner. If your written contract does not inform you of your right to a refund or to cancel, you may demand your refund or cancel your contract at any time, without regard to these time limits. To verify registration and bonding contact the California Department of Justice by email to [email protected].

We urge you not to rely solely on registration or licensing to determine the reliability of a loan modification company. 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. For a more comprehensive report on this subject visit http://www.la.bbb.org/GIReport.aspx?DocumentID=164.