Loan modification scams

Because of the current economic situation, you may not be able to afford your mortgage payment. If you are also not able to refinance your home loan, an option that may be available to you is a Loan Modification.

What is a Loan Modification? That is where you and your lender agree to modify one or more of the terms of your home loan. The terms could be a lower interest rate, an extension of the length of the loan (like making a 30 year loan into a 40 year loan), a conversion of an adjustable rate loan (called an ARM) to a fixed rate, the deferring of some of your payments, or any other modification of loan terms.

The goal of a Loan Modification is to help you keep your home and to give you a real, meaningful, sustainable, and long-term adjustment to your current home loan that works for your financial situation.

Just like after a hurricane hits, where unscrupulous contractors and repair people may collect money for repairs and then not do anything, there are numerous rogue and dishonest operators and companies (many of whom are unlicensed) that have appeared in the wake of the current economic downturn -- and more are popping up every day. They make false promises about their abilities to help get you a loan modification, collect money up front, and then do nothing or next to nothing. They are predators who take advantage of those who are or may be vulnerable. The most common loan modification scam involves the collection of advance fee in exchange for a promise of a sustainable loan modification ,however, once the advance fee is collected, little or nothing is done and the scammer moves on to the next victim.

Do It Yourself (and Do It As Soon As Possible):
You can contact your mortgage servicer and/or lender directly and request a Loan Modification that works for you and your lender. Don't wait to call if you cannot make or believe you will not be able to make your mortgage payments. Be persistent! - call back many times. Make detailed notes about your attempts to call, when you have left messages, who you speak with, what was said, and what offers are discussed and/or made.

Other Free and Safe Options:
If you don't believe you can negotiate a Loan Modification yourself, or if you do not want to, there are free and safe options available to you. For information on free options, you may contact: The U.S. Department of Housing and Urban Development ("HUD") offers Foreclosure Avoidance Counseling through non-profit agencies in California. Go to HUD's web site at , or call 800-569-4287, to find counselors. HUD also offers information to homeowners facing the loss of their home.

HOPE NOW Alliance: A cooperative effort of home loan counselors and lenders and it consists of HUD intermediaries. Go to the HOPE NOW web site at or call 888-995-HOPE.

"Log on, Look em' up, and Check em' out": California licensed real estate brokers can perform loan modification work, and licensed real estate salespersons can do such work under the supervision of their employing broker. While it is legal for a real estate broker to charge you in advance of performing the loan modification services before a Notice of Default is recorded, you do not have to pay anything in advance of a successful loan modification, and all broker fees are negotiable. If a real estate broker wishes to charge an advance fee, he or she must submit an Advance Fee Agreement and all supporting materials to the Department of Real Estate ("DRE"). If the agreement and materials meet the requirements under the law, DRE issues a no-objection letter. All fees collected in advance must be properly handled as trust funds, which require special handling and must be deposited into the broker's trust account. A licensee must refund to you any unearned portion of the advance fee(s) collected if any of the promised services are not completed.

You should go to DRE's web site at , review and check the information on advance fees and loan modification services, carefully review the public license information on the real estate broker (that information will include any disciplinary history), and look for any Desist and Refrain Orders (D&Rs) that have been issued against companies and individuals. If a D&R has been issued, that means that DRE has determined the individual and/or company is unlicensed and/or has operated unlawfully.

California licensed lawyers can also perform loan modification work, but only when such lawyers render those loan modification services in the course and scope of their practice as an attorney at law. Lawyers can also charge fees in advance (typically called a retainer), and even after a Notice of Default has been recorded. But lawyers must have a written fee agreement with you. And as is the case with real estate licensees, you do not have to pay anything in advance of a successful loan modification, and all legal fees are negotiable. Any fees that you pay to the lawyer(s) in advance do not have to be placed in their trust accounts. Just as you should do with real estate licensees, check out lawyers by going to the website of the California State Bar, . Check the lawyer's bar membership records and look for any discipline.

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>> California Dept. of Real Estate website

About Jeff Davi:
On October 6, 2004, Governor Arnold Schwarzenegger appointed Jeff Davi as Real Estate Commissioner for the State of California. As Commissioner, Mr. Davi oversees the licensing and regulation of approximately 532,000 real estate licensees and is responsible for a staff of approximately 344.

Commissioner Davi, of Monterey, California, is a real estate broker with many years of experience in the real estate field. Prior to being appointed, he managed a family-owned residential and commercial real estate firm in the Monterey area. He has significant experience in real estate sales, leasing, management and financing.

Commissioner Davi previously served as a Director for the California Association of Realtors and President of the Monterey County Association of Realtors. He also served as president of the Economic Development Corporation of Monterey County, was co-founder of the Affordable Housing Steering Council of Monterey County and was on the founding board of directors of the Monterey County Visitor and Convention Bureau.

Commissioner Davi is also involved in several non-profits mostly involving children and youth, ranging from children's youth activities and health, juvenile assistance programs to help teens avoid breaking the law and being recruited by gangs, to a statewide foster and adoption service agency that originated in Monterey County.

Commissioner Davi is married with 5 children and a graduate of Saint Mary's College in Moraga.

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