By Kay Wilson-Bolton
August 10, 2010
There have been reports in the Santa Paula Times of good people, believing the best in others, handed over their money to strangers and lost it.
It has happened again at least twice recently in Santa Paula where someone has approached a homeowner about modifying their loan to a lower interest rate. All of that sounds good to every homeowner, but one has to do more to protect themselves.
Whether facing foreclosure or not it is tempting to want to reduce a house payment, particularly during an economic downturn.
Any borrower may seek a loan modification to reduce the interest rate, the loan payment or the principal balance.
Homeowners are tempted to not make mortgage payments when their property investments have less value than when it was purchased, but a loan modification to a lower payment is enticing to everyone.
If anyone entices you to pay for services up front to modify your loan in any way, DON’T.
Unless certain requirements are met, advance fees cannot be collected.
California law defines an advance fee to include a fee claimed, demanded, charged, received, collected or contracted from a principal for negotiating real estate loans. Before anyone can collect an advance fee, they must satisfy the following three requirements:
- The property is owner occupied with one-to-four dwelling units and has a recorded notice of default.
- The plan for modification must be submitted for review to the Department of Real Estate (DRE) and the broker has received a “no objection” letter from the DRE
- The broker must place any advance fee collected into the broker’s trust account as specified and can only be used for expenses or payment when the work is done.
If someone tells you they know someone who can help you modify your loan, or offers to do that for you, slow down and investigate. Talk to someone you trust first and get additional advice; or, call the District Attorney’s Office at 805-662-1750.
The best way to protect your money is to be informed. The advance fee law came into being because people have been hurt by financial loss. Let’s not let it happen again in Santa Paula
Kay Wilson-Bolton is the owner of CENTURY 21 Buena Vista in Ventura and Santa Paula. She always brings a regional perspective to local issues. She can be reached at 805.340.5025. Her web address is www.realestatemagic.com