California Bans Upfront Fees For Loan Modifications – Senate Bill 94
October 26th, 2009 categories: Foreclosures, Seller Resource, Short Sales
California has banned the charging of upfront fees on loan modifications. Governor Arnold Schwarzenegger signed Senate Bill 94 on October 13th, 2009 making the act of charging upfront fees on loan modifications immediately illegal. There have been many people who were taken advantage of by companies who promised to help the struggling homeowners modify their mortgage, only to find that the loan modification companies did little and were ineffective in anything other than taking their money.
The loan modification process is a complex one, and the average homeowner does not have the time, patience, or skills to navigate the internal processes of some of these companies. Where do these people turn for help? Usually to one of the first firms they see advertising their loan modification services, whether it be on TV, or the Internet. On the Internet, it is probably much less expensive to look like a first class legitimate company, and some smooth wording can and has convinced many people to do many things in the past. Unfortunately, the abuse of some consumer got so bad, that a law was needed to protect the general public. It is unfortunate that was needed, however it is great that the law has been passed…now all we need is for these companies to follow the law…whether or not these companies do in fact follow the law will remain to be seen.
The ineffectiveness of many of these loan modification companies lead to more short sales, which in turn lead to more foreclosures, people losing their homes, destroyed credit, and little chance of these people being homeowners again in the next 7 to 10 years.
The good news is that California Senate Bill 94 will end the unscrupulous practices of many of these so called loan modification services. Basically, many of these services were found to simply take your money, and then do virtually nothing to help modify your loan. No wonder they would charge up front fees…if they had tried to charge fees for an effective loan modification, then they would have collected little or nothing.
We want to note that there ARE legitimate firms out there who are performing legitimate loan modification services, getting good results, and charging fair prices to consumers. We do not mean to take anything away from these legitimate firms, unfortunately they were lumped in with some bad associations…that does happen. The legtimate loan modification services are excited about this new law, and applaud the forward thinking of the California Government. Did I just say “Forward Thinking” and “California Government” in the same sentence?
So does this law just apply to Sonoma County? Of course not…Senate Bill 94 covers the entire state of California…so whichever company you choose, know you are legally protected from abuse.
If anyone out there has story about their loan modification process, whether it be a horror story or a story with a happy ending, we would love to hear the outcome, the details, and who you were using.
