Non-profit agencies and banks seem to be overwhelmed by the demand for their home loan modification services these days.
Private consultants are doing business in California ... offering homeowners help getting banks to modify their loans. These consultants charge a price for their services. Some charge as much as $5,000 in advance, and some desperate homeowners, facing crisis, have paid. But what is being accomplished for the money by these consultants?
A California Department of Real Estate spokesman said that this private home loan consulting is a new situation for the real estate industry.
Real estate brokers are required to obtain permission from the DRE to collect fees in advance, but do not need permission if they charge after completion of the work.
The DRE has issued "desist-and-refrain" orders to a few unapproved companies that were charging advance fees, and it advises consumers to check its Web site to verify that a private company's contract has been approved.
Some major banks have their own loan modification programs for their own customers.
Non-profit home loan programs such as Home Ownership Preservation Foundation help clients negotiate with banks. They do this for no charge but are overwhelmed by current demand.
Attorneys in California ... unlike real estate brokers ... can collect up-front fees without DRE approval. Of concern is whether these lawyers will be unsupervised and provide necessary services as requested according to contract.
Some private consultants call themselves financial "hardship consultant" and not a loan modification company. So they do not need Department of Real Estate approval. They try to do the same thing and modify loans for clients.
What you should know about home loan modification:
If you are asked to pay advance fees in California for loan modification, check the Department of Real Estate Web site to see if the consultant you are dealing with has legal permission to collect advance fees. Or call (916) 227-0770.
Ask to see the consultant company "no objection" letter from the California Department of Real Estate.
Review the proposed agreement and consider obtaining independent advice before signing it or advancing any fees.
Compare the services and fees offered by other licensed brokers on the Department of Real Estate list.
Do not pay anyone in advance if you have already received a Notice of Default from your mortgage lender.
Check with local non-profit agencies that help people modify their loans without monetary charge.
See the California Association of Realtors Home Loan Modification Program.
Contact the California Consumer Home Loan Information Program.
Contact a qualified and licensed attorney through the California State Bar. 
Remember, however, that they are not required to register with the state of California for this special loan modification task.
Contact a California licensed and qualified Real estate broker. This is OK as long as their services are fully completed before you pay them.
Harrison K. Long, Explore Properties Group, Coldwell Banker Previews. Source: California Department of Real Estate
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No nonsense & exceptional real estate representation with focus on truth & values. In sales and as an advisor, Harrison has been involved in real estate with clients for more than thirty years.
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This is becoming the newest biggest source of fraud in our industry. I am seeing these folks everywhere. They are replacing the "We Buy Homes" crowd as the newest way to part desperate people from their money.
Randy .. thanks for your thoughtful comment here and support about this new cottage industry, home loan modification consulting. Harrison
Interesting that the CA DRE calls loan mod companies a new "situation". It seems to be out of control. It seems that many of the same loan officers who put people into some of the loan programs -- actually I won't go there right now. I am a loan officer and it gets frustrating to hear the unrealistic things being told to my clients just so an upfront fee can be collected. Purposely missing payments and instead sending that money to the loan mod company as payment, among other things, is out of control. There are few companies that don't charge anything, but they are overloaded. It's a tough situation right now. Hopefully the loan servicers will be able to come up with a better way to effectively work it through.
Great information. I'll make note of the links. Thank you
Tim ... thanks for your thoughtful comment at our article on Be Careful Using Private Consultants for Home Loan Modification. Best wishes. Harrison