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California Attorney General Requires Foreclosure Consultants to Register and Post Bond

June 3, 2009

Foreclosure consultants who are not licensed real estate brokers or attorneys will have to register with the state Department of Justice, the North County Times reported June 1. The new requirement was authorized by a bill authored last year by California Assembly speaker Karen Bass. Consultants must register with Attorney General Jerry Brown by July 1 or face up to a year in jail and fines of $1,000 to $25,000. They must also pay a $100,000 bond, similar to an insurance policy or a construction bond. Customers who lose money to fraud or mistakes by consultants have a right to be repaid from that money, up to the amount of the bond.

The move is a response to the growing threat of loan modification scams, which have mushroomed over the past year as foreclosures rose. In these scams, a crooked "foreclosure consultant" or "loan modification company" promises to help homeowners avoid foreclosure or get a loan workout in exchange for a fee. In some cases, they offer very little of value; in others, they simply take the money or a deed to the home and disappear. One San Diego County prosecutor told the newspaper that his office has received at least 1,000 complaints about foreclosure consultants. State regulators hope that the registry will help consumers distinguish between legitimate businesses and scammers.

As Temecula loan modification attorneys, we're very pleased to see the state government taking steps against these scammers. Homeowners facing foreclosure are already in bad financial situations; they simply can't afford to lose $2,000 or more to a foreclosure scammer. That's money that could pay the mortgage for another month or two or buy services of a legitimate professional who could help. Before this law, foreclosure consultants who were not attorneys or real estate brokers were entirely unregulated. This gave homeowners very little way to distinguish between legitimate businesses and crooks, and the crooks have been taking advantage. Now, homeowners willing to do their homework can at least expect to be repaid if they choose the wrong consultant.

Howard Law LLP offers an alternative to unlicensed foreclosure consultants. We are not a brand-new company that was hastily formed to capitalize on homeowners' misfortune; we are Glendora loan modification lawyers subject to professional ethics laws and potential disbarment for unethical behavior. As attorneys, we also have a key advantage over non-attorney loan modification companies: Banks pay attention when we call, because they know a lawsuit might not be far behind. In fact, we can use evidence of predatory lending violations as leverage to get our clients a fair, sustainable loan modification. Our Lawndale loan modification attorneys have successfully changed interest rates, repayment periods and even loan structures for many Southern California homeowners.

If you're struggling to keep your home, but your lender isn't responding, you should call Howard Law as soon as possible for a free, confidential consultation. To set one up, you can contact us online or call us toll-free at 1-800-872-5925.