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Charging an Upfront Fee for a Loan Modification Prohibited Under California Law
Written By: Melissa C. Marsh, Esq., California Attorney, November 2009
An advanced fee is defined as, "a fee, regardless of the form, claimed, demanded, charged, received, or collected by a licensee from a principal before fully completing each and every service the licensee contracted to perform, or represented would be performed." Real estate agents and brokers may still accept an advanced fee for advertisements in newspapers of general circulation, tenant pre-screening fees, and tenant security deposits.
As of October 11, 2009, Advance Fee Loan Modification Agreements previously reviewed and approved by the Department of Real Estate (DRE) are void and can no longer be used. Loan Modification Agreements entered into and advance fees collected before October 11, 2009 are not affected.
Failure to comply with the new laws can lead to a fine of up to $10,000 for an individual ($50,000 for a business) and one-year imprisonment.
Tags: california loan modification, loan modification
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Located in Los Angeles, California, the Law Office of Melissa C. Marsh handles business law and corporation law matters as a lawyer for clients throughout Los Angeles including Burbank, Sherman Oaks, Studio City, Valley Village, North Hollywood, Woodland Hills, Hollywood, West LA as well as Riverside County, San Fernando, Ventura County, and Santa Clarita. Attorney Melissa C. Marsh has considerable experience handling business matters both nationally and internationally. We routinely assist our clients with incorporation, forming a California corporation, forming a California llc, partnership, annual minutes, shareholder meetings, director meetings, getting a taxpayer ID number (EIN), buying a business, selling a business, commercial lease review, employee disputes, independent contractors, construction, and personal matters such as preparing a will, living trust, power of attorney, health care directive, and more.