Industry NewsMortgage

State bans advance fees for loan mod help

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California has joined nearly two dozen other states in prohibiting foreclosure rescue companies from collecting advance fees for helping homeowners negotiate mortgage loan modifications.Gov. Arnold Schwarzenegger on Oct. 11 signed into law a bill, SB 94, that prohibits any person from demanding or collecting an advance fee from a consumer for loan modification or mortgage loan forbearance services.California had previously allowed real estate brokers and their licensed agents to collect advance fees for negotiating with lenders on behalf of borrowers -- but only after entering into written agreements with their clients, using forms and procedures that had been reviewed by the Department of Real Estate. Fees collected in advance had to be placed in escrow to be drawn on as services were performed. According to the Department of Real Estate's Web site, more than 1,000 real estate brokers had submitted forms for review and obtained "no objection" letters from the state to coll...