California Strengthens Loan Laws
In California, Governor Arnold Schwarzenegger signed Senate Bill 94 today which bans the collection of advanced fees for a loan modification. The Foreclosure Industry blog spoke against the measure,
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.
The post complains that the the state’s attorney general’s office labels everyone in the loan modification field as 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.
Kevin Stein of the California Reinvestment Coalition expressed disappointment in the Governor’s action. “All the evidence that we’ve seen, or the bulk of the evidence, is that that there’s a huge amount of fraud in this industry.” Stein said he was only modestly pleased that the Governor chose to sign Senate Bill 94 by Senator Ron Calderon of Montebello. That bill would ban the collection of advanced fees for a loan modification. He called it better than nothing, but weaker than AB 764.
It will be very interesting to see if he loan modification industry in California survives. I suspect it will, perhaps with higher fees on the tail end.
October 12th, 2009 at 9:27 pm
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