• Home
  • Bankruptcy in Brief
  • ABC’s of Bankruptcy
  • Considering Bankruptcy
  • True Stories
  • Chapter 13
  • Blog
  • About
  • TOC

Northern California Bankruptcy Lawyer

On The Bankruptcy Soapbox

The Soap Box
  • How bankruptcy works
  • Mortgage Matters
  • Consumer Rights
  • You & Your Lawyer
  • Small Business
  • Family Law

Bay Area Loan Modification Scam Busted

By Cathy Moran

Bay Area Foreclosure ScamPeople are desperate to save their homes; scammers are pleased to part them from their money.

Two Bay Area men were convicted this week of foreclosure consultant fraud.

The men took money from homeowners seeking loan modifications.

Sounds innocent enough, until you recall that California law prohibits anyone, even an attorney, from taking money in advance to provide loan modification or foreclosure prevention .

California Civil Code Section 2944.7 reads
(a) Notwithstanding any other provision of law, it shall be
unlawful for any person who negotiates, attempts to negotiate,
arranges, attempts to arrange, or otherwise offers to perform a
mortgage loan modification or other form of mortgage loan forbearance
for a fee or other compensation paid by the borrower, to do any of
the following:
(1) Claim, demand, charge, collect, or receive any compensation
until after the person has fully performed each and every service the
person contracted to perform or represented that he or she would
perform.
(2) Take any wage assignment, any lien of any type on real or
personal property, or other security to secure the payment of
compensation.
(3) Take any power of attorney from the borrower for any purpose.
….
(d) This section shall apply only to mortgages and deeds of trust
secured by residential real property containing four or fewer
dwelling units.
(e) This section shall remain in effect only until January 1,
2013, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2013, deletes or extends
that date.

The take away for borrowers is that anyone who asks for money up front to help prevent foreclosure or modify a loan is breaking the law.

The unfortunate effect of the law, designed to protect homeowners from those trying to exploit them, is that it also operated to make it very difficult for legitimate professionals to provide these service if they have to wait til the successful conclusion of the loan modification for payment.

You can find a free HUD certified foreclosure counselor at http://hud.gov or Foreclosure Help Hotline 408 794 1242.
Image: Fotolia.com

More from the Soapbox

  • Debt Is Nothing To Shrug OffDebt Is Nothing To Shrug Off
  • Debt Collection Breakthrough ProtectionDebt Collection Breakthrough Protection
  • When Can I File Bankruptcy AgainWhen Can I File Bankruptcy Again
  • Doing The Means Test YourselfDoing The Means Test Yourself
  • Laboring Over Bankruptcy PapersLaboring Over Bankruptcy Papers

Filed Under: Real property & mortgages

About Cathy Moran

I'm a veteran bankruptcy lawyer and consumer advocate in California's Silicon Valley. I write, teach, and speak in the hopes of expanding understanding of how bankruptcy can make life better in a family's future.

Bankruptcy Basics

About The Soapbox

You’ve arrived at the Bankruptcy Soapbox, a resource of bankruptcy information and consumer law.

Soapbox is a companion site to Bankruptcy in Brief, where I try to be largely explanatory and even handed (Note I said “try”).

Here, I allow myself to tell stories and express strong opinions. We dig deeper into how to consider bankruptcy and navigate a bankruptcy case.

Moran Law Group
Bankruptcy specialists for individuals and small businesses in the San Francisco Bay Area

How Bankruptcy Works

Bankruptcy Alphabet: F is for First

In my Bankruptcy Alphabet, F is for First meeting of creditors. Lots of rumors exist about the that meeting; it produces unwarranted anxiety that is avoidable if you understand what's up. Let's check it out. The first meeting of creditors, also called the 341 meeting, is often the only time a debtor has to appear … Read more

More Posts from this Category

643 Bair Island Road
Suite 403
Redwood City, CA 94063
Phone: (650) 694-4700
Phone: (650) 368-4700

Categories

All content copyright © Moran Law Group. All rights reserved.