California SB 94 Expected to Become Law Today – No More Upfront Fees on Loan Modifications
October 12, 2009 by christine · View Comments
Today, California Governor Schwarzenegger is expected to sign SB 94 into law.
To summarize, the bill prohibits persons from charging advance fees to borrowers in connection with the modification of the terms of the borrower’s loan, require those who wish to charge a fee for loan modification services (after performing them) to provide a specified notice to borrowers regarding other options available to the borrower, prohibit servicers from imposing any interest or charge for performing services for borrowers in connection with loan modifications or other forms of loan forbearance of forgiveness; and close a loophole in the California Finance Lenders Law.
As we’ve discussed on this blog before, this bill will probably end the loan modification industry in California as we know it.
If you listen to the steady stream of propaganda coming from the California Attorney General’s office, you’d think everyone who performed loan modifications is a scam artist.
The California Attorney General’s advice to do your own loan modification is highly irresponsible. He assumes that the banks have borrowers’ best interests at heart, which we all know is not true. If you’re worried about scammers, let’s take a look at the banking industry, which is the biggest scam artist of them all.
According to a legal assistant contact in one of our attorney’s offices, loan modification companies and law firms alike are literally closing their doors because of this law. The industry is changing overnight.
The good news for homeowners who want to hire an attorney’s office to obtain a loan audit is that it will allow them to break up the cost of the loan modification over time. Because of the rule against charging upfront fees, the costs of the loan modification will be billed over time as the work is completed.
The downside is that the cost of a loan modification from a legitimate provider will go up because of increased administrative and collection costs.
