Both the Senate and House in California have passed SB 94 and AB 764, designed to stop the mortgage modification process in California. It would prohibit loan modification companies, including lawyers from collecting any up-front fees for homeowners that are delinquent on their mortgage, and most likely facing foreclosure.
Once the govenor signs the bill then the law would go into effect immediately. This ultimately will shut down the private loan modification industry in California, forcing homeowners to either do loan modifications themselves or turn to government-run organizations that for the most part has been hugely unsuccessful in getting a loan modification through.
We have spoken with various loan modification companies and most indicate they will just close their doors if they cannot collect up-front fees. How can a company make payroll if there is no money coming in? Typically loan modifications take 4-6 months to go through.
Would you want to go 4-6 months without a paycheck?
Legislators are not in touch with reality if they think the prohibition of upfront fee collections is a solution to the problem.
We predict that the passing of this bill will create mahem in the foreclosure world – leading to higher forclosure rates in San Diego, and Orange County.
Stay tuned for the wild ride!
