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Question: What is the new law in California in collecting advance fee on loan modification?
Answer: SB 94 was signed into law and made effective last October 11, 2009 make it illegal to collect advance fee on loan modification. However, fees may be collected if the contracted work has been accomplished. The prohibition covers any person including real estate licensees and attorneys.
Question: What happens to advance fees collected prior to October 11, 2009?
Answer: Agreements entered into and advance fees collected prior to October 11, 2009 are not affected and remain valid and binding.
Question: What is meant by advance fees?
Answer: Advance fees are a fee, regardless of the form, claimed, demanded, charged, or collected by a licensee from a borrower before completing the service the licensee contracted to perform. The term applies to a fee to negotiate loans modification.
Question: Are fees charged by "non profit" organizations claimed as membership fee but actually in regards to loan modification included in the prohibition?
Answer: Based on the wording of the law any advance fee regardless of the form claimed or charged (in this case "membership fees") is still advance fee and included in the prohibition by the state of California.
Question: Are the fees on loan modification and loan refinance included in the prohibition on advance fees?
Answer: Based on the wording of the law any advance fees in connection with negotiation of loans involving residential real property is included in the prohibition.
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