 Although the number of real estate licensees in California is down, loan modification scams have skyrocketed, prompting the California Department of Real Estate to shift focus from licensing to enforcement.Gov. Arnold Schwarzenegger signed SB 94 Oct. 11, which imposes substantial administrative and criminal penalties for violations to protect homeowners from employing illegal services to resolve mortgage issues.
p>California Real Estate Commissioner Jeff Davi said his department has been deluged with complaints, most of which involve loan-modification scams. Of the 8,900 loan complaints filed, he said the department is currently investigating 1,300.Davi said SB 94 is a victory for troubled homeowners facing foreclosure. The bill bans all foreclosure consultants, including loan-modification firms and attorneys who specialize in loan modifications, from charging any fees or compensation before fully completing the services contracted, whether the modification is successful or denied by the servicer.
However, Davi said realtors should remind troubled homeowners they do not have to pay any fees for a loan modification, because there are federal refinancing and modification programs and non-profit organizations that provide free help and advice.
The bill is labeled an “urgency measure,†Davi said, which means it takes effect immediately.
Davi 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.â€
In other real estate news, realtors are encouraging Congress to extend and expand the first-time homebuyer tax credit.
“(It’s) one of the best things about the government’s stimulus package,†Davi said.
The Silicon Valley Association of Realtors provided information for this article.