Back in March I wrote a warning about Loan Modification companies, and how even the State Bar of California had issued an ethics warning for attorneys. That article can be found here. Well, guess what . . . now the office of the California State Attorney General has jumped into the fray in a very big way. If you are a consumer looking for a loan modification, or a company engaged in the business of Loan Modification, beware — Jerry Brown is gunning for you!
In a press release issued on Monday, the Office of the State Attorney General issued a directive which requires all loan modification companies to register with the State Attorney General, and to post a $100,000 bond by July 1, 2009. Additionally, the companies must provide with the registration a name, address and telephone number; all names, addresses, telephone numbers, websites and email addresses used or proposed to be used in connection with their business; copies of all advertising; copies of all contracts to be used with consumers; a copy of its $100,000 bond. For those who do not register, they will be considered to be in violation of State law, and subject to criminal penalties of up to a year in prison, and fines ranging from $1,000 to $25,000 per violation! For those who do submit an application for registration, the Attorney General’s Office warns that they will be reviewing prior advertising and claims, and will deny applications of those who they believe are not honest, truthful and performing legitimate services.
Once again, we are left with the impression that much of the “Loan Modification” industry is shady. That being said, however, you will find that law firms engaged in helping consumer can be a real source of assistance in matters such as these. I am not talking about “attorney-backed” or “attorney-supervised” Loan Modification companies, rather, firms where an attorney is going to take an active role in representing you with your lender, and working towards a legitimate solution. Don’t be fooled by slick advertising on television and radio — some of which seem to imply that they are somehow connected to President Obama’s housing recovery plans — ask who will be working on your file, how is a loan modification handled and most importantly, if they offer you a guaranteed result — even a money-back guaranteed result — its probably not legitimate. Use common sense and you can avoid being one of the hundreds of people I have corresponded with in the past several months who have been scammed.
David L. Gibbs is an attorney with The Gibbs Law firm, APC. The firm’s practice focuses on issues related to Bankruptcy, Business Law and Manufactured Housing; including community subdivision, pre-purchase diligence and analysis as well as advising community owners on operational, financial and enforcement issues. The firm also represents manufactured home dealers in a wide range of issues. David L. Gibbs is admitted to the Federal Courts for the Central and Southern District of California, and also holds a California real estate broker’s license. The firm continues to offer a wide range of real estate and business related services as it has done for 34 years from its offices in San Clemente. Mr. Gibbs can be reached at (949) 492-3350.