Legal Question in Real Estate Law in California
In January of 2009 an employee of Law firm collected a 1,500 advanced payment from us to help with a loan modification application. Subsequently we were denied the loan mod and I asked for a portion of the money back. She denied our request. Is it legal to ask for an advanced payment?
2 Answers from Attorneys
Not now, but it was in January of 2009. The applicable law is Civil Code section 2944.7, and it went into effect on October 11, 2009.
Effective October, 2009 in California, it is illegal to collect any fees, regardless of the form, for negotiating or attempting to negotiate a loan modification for a residential mortgage. All modification services must be fully completed before any money can be collected. It is also illegal to divide fees or services into components for the purpose of avoiding this law.
Mr. Whipple is right. The law went into effect in October of 2009, so it would not apply to your situation.
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