California law bans upfront fees for loan modifications

Hi everyone,

A new law, prohibiting collection of advance fees by providers of loan modification services, has come into effect in the state of California. The Senate Bill 94, as it is known, now makes it illegal for any person or firm to receive upfront fees from consumers, until their promise of delivering loan modification assistance is fulfilled.

The bill not only applies to persons or firms offering loan modification services in California, but also to those operating outside of California and offering such assistance to California consumers. The law also makes it mandatory for the modification companies to let the consumers know that they have the option of calling their lenders directly to request for a modification of their loan terms. The providers of loan modification services are also mandated by the law to disclose to the consumers that similar services can be obtained from HUD-approved housing counseling agencies, free of charge.

Thanks,

Jerry