Foreclosure Consultants Are Facing New Regulations in Sacramento

Sacramento

The foreclosure consultants in Sacramento have till the end of June 2009 to register themselves with the state under new regulations introduced by California Sate. The target is to stop foreclosure frauds that are mushrooming with increase in foreclosure numbers.

The two counties of San Bernardino and Riverside have the highest number of foreclosures in the state and the country. The distress of the home owners has led to the mushrooming of foreclosure assistance groups. It has become like a cottage industry. Most of them are frauds preying on the misfortune of others. Whatever is left of the bones of the half-dead foreclosure victims is picked off. The so-called helpers make false promises and decamp after pocketing fees and sometimes even the title deed.

Scott Gerber speaking on behalf of Attorney General Jerry Brown said that they have got over 600 complaints about these foreclosure help firms. The accurate number from the two worst affected counties of Riverside and San Bernardino is as yet unknown.

The office of the Attorney General announced recently that the foreclosure assistants will have to file their registration with the department and deposit $100,000 bond by 1st July 2009. Those failing to do so would face penalties of more than $25,000 in addition to a year in prison. Scott Gerber explained, “If they haven’t signed up, the consumers should be very wary of working with that person. We also think this sends a strong message to those working in this industry: Sign up, register with our office, submit yourself to scrutiny, or else be in violation of the law.”

The relevant legislation was passed last year. The law allows customers to cancel the contract within five days. The consultant has to give the client a copy of the agreement in the language opted for by the customer. Some of the legislators want to make the rules more expansive.

There are bills waiting in the Legislature that would stop the practice of making advance payments for working out loan terms. Inland state Senator John Benoit did not vote for the legislation. He argued that his office has not got any complaints about the wrong activities of foreclosure consultants. He argued, “When we are looking at a budget deficit of however many billions of dollars, is this really what the government needs to do?”

None from the real estate lobby opposed the bill about registration.