Prohibition Against Advance Fees for San Diego Loan Modifications
Great news for San Diego homeowners! A new law was passed by the California Legislature and the U.S. Congress that may affect San Diego Homeowners in 2013.
Prohibition Against Advance Fees for Loan Modifications that was originally set to expire on January 1, 2013 has been extended. It is the prohibition against California real estate licensees, attorneys, and others from claiming or collecting any compensation for a loan modification or other form of mortgage loan forbearance until after the licensee fully performs each and every service as promised. A licensee engaging in a San Diego borrowers loan modification activity as defined is also prohibited from taking any wage assignment, lien, or power of attorney from the borrower.
These prohibitions only pertain to mortgage loans secured by California and San Diego residential properties with one-to-four units. A violation of this law is punishable by one-year imprisonment, plus a $10,000 fine for individuals or a $50,000 fine for businesses.
The statute of limitations to prosecute a violation of this law has been extended from one year under existing law to three years after discovery of the offense or completion of the offense, whichever is later. This law is extended until at least January 1, 2017 according to Senate Bill 980, if not indefinitely according to Assembly Bill 1950 (both bills were signed into law on September 25, 2012).
Assembly Bill 1950 and Senate Bill 980 (codified as Cal. Bus. & Prof. Code § 10085.6, Cal. Civil Code § 2944.7, and Penal Code § 802) (effective January 1, 2013).