Do your homework before paying any advance fees for foreclosure prevention or loan modification services.
The California Department of Real Estate (DRE) has issued a consumer alert warning homowners about paying advance fees for foreclosure or loan modification consulting services. If you are behind in your mortgage payments, be sure to investigate before you sign any agreements or pay any up-front fees for foreclosure consulting services.
In general, once a Notice of Default (NOD) has been filed by your bank, DO NOT pay an advance fee to anyone but a lawyer. All other individuals and entities are prohibited from collecting advance fees once an NOD has been filed. Non-profit agencies have been set up to help homeowners in this situation, which you can find through the FHA or through the Hope Now program. Real estate licensees are also authorized to help you, but only if they collect their fees AFTER the work has been completed.
If you are seeking help with your loan modification BEFORE the NOD is filed, then a real estate licensee may help you in return for an advance fee for their services. HOWEVER, the licensee (realtor or broker) must have you sign an agreement that tells you what services will be performed, when they will be performed and how much you must pay. In addition, the agreeement must have been submitted to the DRE and approved before the realtor or broker can charge you an advance fee for their services. To verify whether a real estate licensee has been approved to collect advance fees, click here for a list or call (916) 227-0770.
For individuals or companies offering foreclosure or loan modification services where payment is required AFTER the work is complete, no restrictions or qualifications are required.
Many of the foreclosure prevention or loan modification services offered to Santa Clarita homeowners are the pay-in-advance type, where you’ll be required to pay an up-front fee of $2,500 or more, which is usually non-refundable, before they’ll start working on your situation. Be cautious of these services, and when in doubt call the California Department of Real Estate for further information.
Read more about the various types of foreclosure rescue scams here.
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