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REALTOR®: New Law Will Stop Loan Modification Scams

Wednesday, November 4, 2009

California Department of Real Estate Commissioner Jeff Davi hailed the passage and signing of SB 94 by Governor Arnold Schwarzenegger this month. The law aims to protect troubled homeowners from loan modification scams, Davi told REALTORS® at a Silicon Valley Association of REALTORS® tour meeting this month.

Since the number of real estate licensees is dropping due to the state of the market, Davi said the DRE is shifting its focus from licensing to enforcement. He said the department has been deluged with complaints, most of which have to do with loan modification scams. So far, the DRE has received 8,900 loan modification complaints.

"SB 94 makes it illegal to charge for, or collect any up-front fees, to restructure a home mortgage," according to Davi. "It is clearly a victory for troubled homeowners who are facing foreclosure."

SB 94 bans all foreclosure consultants, including firms and attorneys who specialize in loan modifications, from asking for any fees or compensation before fully completing the services contracted, whether the modification is successful or denied by the servicer. The bill, sponsored by Sen. Ron Calderon (D-Montebello), is labeled as an "urgency measure," which means it took effect immediately, once the Governor signed it on Oct. 12.

Davi told REALTORS® to remind troubled homeowners that they do not have to pay for a loan modification. There are federal refinancing and modification programs and nonprofits that provide homeowners with free help and advice. He also urged the REALTORS® to report violations and to tell their clients to do so too.

"That's the only way we can get the bad actors out of the profession who are tarnishing the profession," Davi said.

Visit the DRE Web site at http://www.dre.ca.gov/ for more information about licensing, new real estate laws and requirements, or to file a complaint.


The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.

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