Legal Question in Real Estate Law in California

You need to check yuor representative out. If you signed a contract at one price and she is now demanding more money, she is not to be trusted. Once a aprice is agreed upon, people finish the job even if they lose money because that is what they agreed to and insome cases they do less work for the same pay.

Back taxes would normally be paid to the County; if she is saying not to pay the taxes to put more pressure on the bank in that they will have to pay the taxes if you default, her logic may be sound but there is some risk involved. I think for your protection all funds you pay should be deposited into an account that only you can withdraw from, otherwise she can take your money and do nothing to help you.

As to the lender, I would not trust anything they say without independent support.

The laws just changed to make most of what loan mod people were doing illegal, trying to prevent the scams being conducted. Discuss the situation with him, and request your money back unless he is in legal compliance and actually providing legitimate services.