Economic times are still difficult enough to where homeowners may be tempted to work with an "attorneys office" specializing in "loan modification" or similar promise of a mortgage loan re-write. The California bill which was meant to stop the mad feeding frenzy of 'loan modification' opportunists, SB 94, passed the state assembly on September 2nd, 2009, passed the state senate on September 8, 2009, finally to be approved by the governor and officially filed on October 11, 2009. There were some possible unintended, "baby out with the bath water" consequences to this bill, as outlined by mortgage-implosion prophet Martin Andelmen ( http://mandelman.ml-implode.com/2009/09/california-sb-94-passes-assembly-62-10-ab-764-passes-senate/ ) as well as a potential to breed a new breed of loan modification scammer who happens to have a little more patience and a network of salivating investors waiting for their foreclosure 'leads' to ripen, but like it or not the bill drove out many of the more grotesque opportunists from distressed homeowners. So why am I writing about this three and a half years later?
In addition to having a recent experience reported to me by one of my clients, a horror story on par with any pre-SB 94 loan modification scam scenario, there is an important provision in SB 94:
"This bill would, until January 1, 2013, prohibit any person, including a real estate licensee, who negotiates, attempts to negotiate, arranges, attempts to arrange, or otherwise offers to perform residential mortgage loan modifications or other forms of mortgage loan forbearance, as specified, for a fee or other compensation paid by a borrower, from demanding or receiving any preperformance compensation, as specified, requiring any security as collateral for final compensation, or taking a power of attorney from a borrower, and would make a violation of that prohibition a misdemeanor or subject to specified fines."
This quotation I wanted to share depicts two very important things to the homeowner: 1. The nature of what was made illegal by the passing of the law (and what wasn't, which I'll get into shortly) and 2. The expiration date for the law which if you'll notice came and went at the beginning of this calendar year. In a nutshell, here is what loan modification scammers devolved into after SB 94 passed: reputable-looking attorney offices convince a homeowner to give them authorization to represent them and actually "push" the homeowner into a short sale. In addition, these attorneys are buying the property with the sole purpose of flipping and putting them back on the market. In other words, the attorneys are not interested in 'representing' the homeowners interests with regard to negotiations with the banks, but rather, in acquiring and flipping the homeowner's property. What's more, they can charge up front fees to do it, technically speaking.
Let the homeowner beware, check the attorneys office to find out what kind of law they actually practice, who the firms owners are, and know what kind of authorizations you are giving to this 3rd party supposedly representing your interests. If you as a homeowner are, through whatever circumstance, tempted to engage the services of an attorney to represent you in negotiation with your mortgage lender or servicer, please perform your due diligence. Remember also there are other professionals who should receive an equal amount of your attention in said circumstances, namely a mortgage lender with a strong awareness of the many government loan programs available to distressed homeowners as well as having strong resources to aid borrowers in improving their mortgage credit profile in spite of current or prior circumstances. Obviously, your local real estate professional such as myself should be consulted as well, as there are some amazing non-investor/predator related options available to downsize or relocate.
Ann Stefanucci
DRE #00635764
First Team Real Estate
562-244-8021
DRE #00635764
First Team Real Estate
562-244-8021
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