The state Department of Real Estate, citing an explosion of loan modification companies asking struggling desperate buyers for advance fees, has issued a consumer alert spelling out what the laws are.
The Home Front print edition today featured a story on this.There were some problems earlier today with links to the DRE site. But we're getting them fixed.
Here they are, a link to the consumer alert and another to the list of modification firms that ARE allowed to ask for money up front providing they have cleared the contract with DRE.
The Nevada Department of Business and Industry has issued a similar consumer alert for our friends in Nevada. Its law also says that foreclosure consultants can't charge up front . But that's only if you are already in default (missed two or three payments and received a formal notice of default from the bank). Companies ARE allowed to charge you in advance in Nevada if you haven't defaulted.
I know this is a huge problem out there because I've had countless phone calls in recent weeks from borrowers. They also cite as part of their problem: the fact that they don't know who to trust. People call on the phone and offer to modify loans - usually for a big advance fee. Many say they've paid up and then seen the loan modification people disappear. It's just one more example of rogues in the real estate industry who are always adapting to the newest problems people are having. Honestly, this is an industry that is going to have years of an uphill fight to rebuild trust.