It breaks my heart when I hear a homeowner say they paid a third party to modify their home loan and got no help. There are too many people out there claiming to be “loan modification consultants” and making promises they cannot keep. Worse yet they are charging desperate homeowners thousands of dollars to perform a service they know they may not be able to deliver.
I am happy to say that, as of yesterday, there is a California bill on the governor’s desk that would make collecting money in advance for a loan modification illegal.
The bill is AB764, the Homeowner Fraud Prevention Act.
The essence of the bill says this:
- Only a homeowner or a licensed realtor can perform services for borrowers in connection with the modification of terms of a mortgage loan.
- No up- front fees can be charged for this service. In other words, if the loan is not modified no fees can be charged.
- Violations include a $20,000.00 fine for an individual and a $60,000.00 for a corporation and up to 1 year in jail.
This legislation is great news for homeowners who are desperate and vulnerable. Once the bill is signed the only people assisting with loan modifications will be those interested in helping a struggling homeowner; not scammers or people just looking to make a buck without regard for the homeowner situation.