An emergency measure taken this week, Senate Bill 94 is effective immediately and will remain in effect through January 1, 2013. The action taken by California Governor Arnold Schwarzenegger was designed to prevent distressed homeowners from being taken by companies charging upfront fees for loan modifications and then abandoning them.
Senate Bill 94 prohibits foreclosure consultants, which includes attorneys who specialize in loan modifications and loan modification companies, from taking any compensation or fees before completing the service.
This new law may likely cause many law firms and individual legal practitioners previously engaged in providing loan modifications services to close their doors. The same may be true for loan modification companies which have historically provided services only with payment of upfront fees regardless of whether the loan modification was approved or denied by the servicer.
Only time will tell how many individuals and companies will remain committed to helping distressed homeowners facing foreclosure now that upfront payment for providing such services are prohibited.
Many truly dedicated real estate professionals provide loan modifications services at no cost to the homeowners with the understanding that if the loan modification is not approved, the homeowner will list the property with the agent and attempt to complete a short sale.
Senate Bill 94 is a big win for California homeowners facing foreclosure. It is now against the law to charge before completing a loan modification service.
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Copyright © 2009, All Rights Reserved by Kathleen Daniels *Schwarzenegger takes Action for Californian’s Facing Foreclosure*