Real Estate Articles
New Law Will Stop Loan Modification Scams, DRE Commissioner Tells SILVAR Members
The number of real estate licensees in the state of California is down, but loan modification scams have skyrocketed, prompting the California Department of Real Estate to shift its focus from licensing to enforcement. The good news is on Monday, Governor Arnold Schwarzenegger just signed SB 94, which attempts to protect troubled homeowners from these scams, DRE Commissioner Jeff Davi told SILVAR members at Wednesday's Los Gatos/Saratoga District tour meeting.
The state of California peaked with 548,000 real estate licensees; as of Wednesday, there were 510, 212, according to Davi. He believes the number is actually lower, since it does not take into account non-practicing licensees.
Davi said the DRE has shifted to its focus from licensing to enforcement as the Department has been deluged with complaints, most of which involve loan modification scams. The DRE has received 8,900 loan modification complaints and is currently investigating 1,300.
Davi said the signing of SB 94 by the Governor is clearly a victory for troubled homeowners who are facing foreclosure. The bill bans all foreclosure consultants, including loan modification 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 takes effect immediately, making it illegal to charge for, or collect any up-front fees, to restructure a home mortgage.
REALTORS® need to remind troubled homeowners that they do not have to pay for a loan modification, as there are federal refinancing and modification programs and nonprofits that provide free help and advice, Davi said.
Davi also commended the National Association of REALTORS® for providing members with a federal credit union and for continuing to fight for the extension and expansion of the first-time homebuyer tax credit, describing the program as "one of the best things about the government's stimulus package."
The DRE commissioner is optimistic about the housing situation. "We all know in California real estate is cyclical," he said. "We've had a pretty good run from the mid-1990s to 2006. Sales are up, inventory is down and this brings opportunities for a lot of people."
Davi estimated it's going to take two to three years to get through the REOs and foreclosures. "We need to worry about how to get the REOs out of the vacant status to the occupied status, and get them in the hands of the consumers," he said.
Then Davi asked SILVAR members to report violations. "The Department is only so strong as its people. We require people to turn in other people when things are going wrong," he said. "That's the only way we can get the bad actors out of the profession who are tarnishing the profession."
Davi also reported that electronic exam licensing is now underway in Oakland and should be ready to roll out in four other offices by next year, thus speeding up the licensing process. He also asked REALTORS® to take the time and complete a survey in the DRE Web site. The results of the survey will be used to revise the real estate exam to make it more realistic and appropriate for California.
Visit the DRE Web site at http://www.dre,ca.gov/ to obtain the survey, for e-license processing, to check on the status of a license, new 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 email or call the SILVAR office at (408) 200-0100.