California Department of Real Estate Investigates Loan Modification Companies

The California Department of Real Estate has issued warnings to consumers regarding loan modification companies. While some companies may be performing services in good faith, many of these new loan modification companies are run by former subprime mortgage brokers who want to have their cake and eat it too. Even legitimate loan modification companies may be in violation of California and/or Federal law if they do not closely monitor their own loan modification practices. For example, the DRE is investigating companies using advance fee agreements and companies that represent borrowers after a Notice of Default has been issued. The law imposes significant restrictions on such companies, and any responsible broker or manager should immediately consult an attorney to ensure they are compliant.