California Attorney General Brown Issues Directive to Foreclosure Consultants
Attorney General Edmund G. Brown Jr. issued a directive today that forces “foreclosure consultants” to register with the Attorney General’s office and post a $100,000 bond by July 1, 2009.
According to the press release issued by the AG’s office, the foreclosure consultants that fail to comply “will be in violation of state law, subject to criminal penalties of up to a year in jail and fines ranging from $1,000 to $25,000 per violation”.
“California is awash with con artists who prey on vulnerable families facing foreclosure,” Brown said. “By forcing foreclosure consultants to submit detailed information to my office and post a $100,000 bond, this registry will help bring long-overdue transparency to this shadowy world.”
To properly register with the AG’s office under this new directive, foreclosure consultants need to provide:
- Name, address, and telephone number.
- All names, addresses, telephone numbers, websites, and e-mail addresses used or proposed to be used in connection with their business.
- Copies of all advertising.
- Copies of each different contract the consultant will use with consumers.
- A copy of its $100,000 bond.
Those providing the proper information will receive a Certificate of Registration from the State Attorney General, however, the AG’s office may “refuse to issue, or choose to revoke, a company’s Certificate of Registration if the foreclosure consultant has made any misstatement in its registration form, has been convicted of fraud or misrepresentation, has been convicted of a violation of the state’s foreclosure consultant laws, California’s false advertising, unfair or deceptive practices laws or other laws dealing with mortgages,” the press release said.
If a registered company subsequently violates the law related to providing services as a foreclosure consultant, a court can order that restitution be paid from the proceeds of the $100,000 bond. Time is of the essence, because the AG’s office says: “foreclosure consultants should send in their registration application and materials as soon as possible so they can be reviewed and approved prior to July 1st.”
This new registry was established as a result of legislation sponsored by Speaker of the Assembly Karen Bass, AB 180, which was signed into law last in 2008. You can find a copy of the forms required to register at: http://ag.ca.gov/register.php under the “Foreclosure Consultant Registry.”
And, after July 1, 2009, consumers can call the Attorney General’s office to determine whether a company has been issued a Certificate of Registration, prior to engaging the assistance of that company.
The question, of course, is whether this new directive applies to only “foreclosure consultants,” as defined by the California laws governing foreclosure consultants, or whether the AG would like to see all loan modification firms, or even law firms, comply with this new requirement as well.
I called the Attorney General’s office this afternoon and was told that the answer, although not cut and dry, is probably “yes”.
The definition of “foreclosure consultant” appears to be found in California CIVIL CODE SECTION 2945-2945.11, as follows:
Foreclosure consultant” means any person who makes any solicitation, representation, or offer to any owner to perform for compensation or who, for compensation, performs any service which the person in any manner represents will in any manner do any of the following:
- Stop or postpone the foreclosure sale.
- Obtain any forbearance from any beneficiary or mortgagee.
- Assist the owner to exercise the right of reinstatement provided in Section 2924c.
- Obtain any extension of the period within which the owner may reinstate his or her obligation.
- Obtain any waiver of an acceleration clause contained in any promissory note or contract secured by a deed of trust or mortgage on a residence in foreclosure or contained that deed of trust or mortgage.
- Assist the owner to obtain a loan or advance of funds.
- Avoid or ameliorate the impairment of the owner’s credit resulting from the recording of a notice of default or the conduct of a foreclosure sale.
- Save the owner’s residence from foreclosure.
- Assist the owner in obtaining from the beneficiary, mortgagee, trustee under a power of sale, or counsel for the beneficiary, mortgagee, or trustee, the remaining proceeds from the foreclosure sale of the owner’s residence.
As to law firms, the code also says that a foreclosure consultant does not include any of the following:
1. A person licensed to practice law in this state when the person renders service in the course of his or her practice as an attorney at law.
And there are others as well, mostly having to do with being a lender of some kind. To read the entire section of the code click here: http://www.leginfo.ca.gov/cgi-bin/displaycode?section=civ&group=02001-03000&file=2945-2945.11
Here’s my take on what the AG’s office wants to have happen:
I think loan modification companies should consider registering with the Attorney General’s office, even though the new directive does not specifically name loan modification firms as being required to do so, and the representative of the AG’s office concurred, although he could not state an official position other than to refer me to the code as stated above.
The overriding point is that loan modification firms do, for the most part, offer to save a homeowner from foreclosure and that’s what it says in item #8 above, and in my mind at least, this is a step in the right direction: making private sector loan modification firms a legitimate source from which consumers can feel safe obtaining assistance.
I also asked the representative of the Attorney General’s office whether he thought that law firms offering such services should also consider registering, and he was less sure, saying that law firms should check with the State Bar Association. However, he did say that, if a law firm is handling foreclosure consulting type work as part of their normal practice, that’s one thing, but if the firm has added loan modification work to it’s existing practice, they may in fact want to register.
What does all that mean? I can’t be positive, but I do think that registering and posting a bond… if it makes the California AG more comfortable with private sector loan modification firms… then it’s a good thing.
One thing I know for sure… you should contact the State Attorney General’s Public Inquiry Unit at: 800-952-5225
I'm almost speechless, but not quite.
Somewhere in Washington there's a lot of grocery stores short of little brown bags (that can hold a lot of cash). What other conclusion could a thinking man conclude? Mark my words. This is a policy you will see implemented all around the country, very soon.
The government obviously does not want anyone with knowledge helping out homeowners in distress. The government and banks are much better equipped to shear these sheeples! You...Yeah you! Your a sheeple too, if you're a supporter of this assinine policy.
This housing bust is the biggest game of musical chairs ever played. Millions of players and only thousands of chairs. How does that Don McLean American Pie song go? "The day.........the music died."
As a citizen, I want to know where my fucking chair is? I'm tired and I want to sit down!
With leadership like this, it's no wonder why people are fleeing California in unprecedented numbers. Book your flight today! I hear there's a new airline in town called Government Airways (GA) and they're running an exodus special. You don't have to pay for the ticket until you reach your destination. And only if your giddy upon arrival.
The mortgage companies and the government are in cahoots -- knowingly or not -- to prevent borrowers from getting assistance. I understand the need and the desire to address the fraudulent activities that are going on in this industry, but this is not the way.
There are lenders that practice obstructionist methods to keep third party specialists from providing effective help to borrowers. There is a lender that indiscriminately puts a 30 day hold on any file that doesn't come directly from the borrower. So if a homeowner hires an attorney to help them with their file, and the attorney faxes or e-mails the documents in, the lender doesn't touch the file for 30 days, just because. How is that good business?
Now, this mandate by the attorney general's office is nothing more than a stunt to make everyone think that the state is on their side, to make people scared to work with third parties, and to send them running into the hands of the lender (who gets paid per file by the federal government to modify loans -- something that they should be doing in the first place). This is in addition to the billions of TARP money that these financial institutions have taken.
So you want a valid business to put up a $100k bond with the state -- in addition to the tax money that they've taken in the stimulus -- to prove that they are a valid business? Why not just go after the fraudulent companies, make examples out of a few of them, which will scare people straight, and concentrate on the state's $20 billion+ deficit?
Again, I understand what's going on out there, but this is an inordinate mandate by the state that is going to hurt homeowners more than help them.
I like how the first reaction by people in the mortgage industry everytime the government (state or federal) cracks down on unscrupulous activity, "The consumer will be hurt if I go out of business!" Sorry, I've heard that line before from hundreds of brokers and LOs. Sorry to burst your bubble but the consumer will benefit from your demise. The reason for this problem was the rise of former LOs and brokers (who should have never been in the industry in the first place) that didn't want to part with their McMansions and BMWs so they jumped into the mod business thinking it was easy money. When they found out it was hard work, they abandoned the homeowner after taking their money.
that is a fair statement relating only to a portion of the industry.
few apples, sure. but who dare toss away the good ones when people are starving?
baby with the bathwater?
shaka khan? shaka khan?
its just expedient. plus the cahoots thing.
o well. can't stop an 18-wheeler doing 90 with a weed whacker.
I don't see what the big deal is...if you're a "foreclosure consultant" or a loan mod company, get a bond. Register with the state. Do your work. Save a home. Move on, people. The problems we face are MUCH, MUCH bigger than this. If Fred the Loan Mod King can't afford to post a $100k bond, Fred is in the wrong business, because he sure can't afford to put in the necessary time, energy and resources to successfuly modify a loan and make sure that homeowner can stay with it for the long haul.
Super-d-fly, the reason a bank takes 30 days to review a file from a lawyer or laon mod company is that the moron at the front line dealing directly with the customer can only offer them basic modification guidelines. If the client accepts the first offer the bank gives them, "yippie", says the bank, one less file to work on and a $1000 from Uncle Sam. Many businesses are required to psot bonds...the state doesn't get that money.