California Senate Bill 94 Update

EFFECTIVE DATE: October 11th, 2009
SIGNED: October 11th, 2009

Senate Bill 94 prohibits any person — including a real estate licensee or California attorney — from offering or negotiating “foreclosure rescue” or “loan modification” services where an advance fee is charged before performing all services provided in the contract. The law also requires written notification be included in the contract to inform homeowners that the services of these intermediaries are not required.

California Notaries and Signing Agents have been asked to accept assignments from foreclosure rescue and loan modification companies seeking to intervene between a homeowner and lender by providing services to renegotiate a mortgage or to postpone or preclude foreclosure. Because the new law prohibits the collection of any type of advance fee by a foreclosure rescue company, California Notaries and Signing Agents should not agree to perform an assignment that asks the Notary or Signing Agent to obtain a check for advance fees.

Foreclosure rescue companies are also prohibited from taking a power of attorney from a client.

Attorneys General across the nation are warning Notaries not to accept work from “Mortgage Rescue” firms.

View the text of the law, details about the changes and an NNA analysis here here

SUMMARY: If you are asked by anyone to pre-pay for services regarding the renegotiation of your mortgage, don’t.  It is now illegal in the State of California to require such a payment.

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About Aurora Harris

Ms. Harris has both a litigation and appellate practice and is an active trainer and mentor for new consumer lawyers. She was admitted to the California State Bar in 1980, and has been representing consumers in actions against car dealers and finance companies since 1983. Ms. Harris is the President of the Christian Legal Aid Organization in Orange County. She was a former Co-Chair and Board Member of the National Association of Consumer Advocates (NACA), and is a partner of the National Consumer Law Center. She has represented NACA as an advisor before a committee of the National Conference of Commissioners on Uniform State Law (NCCUSL) that was drafting a proposed uniform state Consumer Leasing Law. She was also a principal drafter of a NACA amicus brief on dealer advertising.

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