Legal Question in Real Estate Law in California

You would be entitled to a refund if the loan modification service (a) guaranteed results, or (b) failed to perform all the services they committed to provide. Your contract probably doesn't guarantee results, and more likely than not, does not go into any detail as to what efforts they were required to make in order to earn the money advanced. I think some people have had some luck in getting refunds through pressure applied by state agencies, and after reviewing your agreement to see what was promised to you, you may wish to contact the consumer protection, real estate or attorney-general departments. I think there is a lot of information posted on these government Web pages and probably elsewhere.

In addition, as of 10/11/09 up front fees for loan modification are barred in California. Even if the original agreement was made before 10/11, no additional payment after 10/11 are permitted. If the loan modifier gets a no objection letter fronm the department of Real Estate they can continue work on the modification, but if they do not get that letter the contract is no longer binding. Since laws are not supposed to work retroactively against contracts [can not make what was a legel contract illegal at the time it was made], supposedly any money you paid before 10/11 is not refundable, but court frequently do void contracts that previously were valid [rent control, etc.] so you might be able to convince a small claims court judge that you are entitled to a refund, especially if you can show nothing was done.

If you have already entered into an agreement with a licensed real estate broker for loan modification or other mortgage loan forbearance services prior to October 11, 2009 and that broker had received a �no objection� letter from the Department of Real Estate, they are permitted to continue providing those services for you according to the terms of the contract. However, they are NOT permitted to collect any further advance fees from you. For a list of those individual and corporate real estate brokers who had received �no objection� letters, CLICK HERE

For more information on this subject please read the following alert: http://www.dre.ca.gov/pdf_docs/FraudWarningsCaDRE03_2009.pdf. You may also call the Mortgage Loan Activities Unit at (916) 227-0770.