NEW CA laws regulating foreclosure consulting

[Hazel L]

***Please disregard if you do not do business in CA***

Came across this post the other day and thought the BP community could benefit. For all you bird dogs and real estate consultants out there who are not principals in your transactions:

"After July 1, 2009, with certain limited exceptions, it is illegal to operate as a mortgage foreclosure consultant in California unless the foreclosure consultant has obtained from the Department of Justice a Certificate of Registration as a Mortgage Foreclosure Consultant." (this is from the office of the office of the Attorney General's site: http://ag.ca.gov/consumers/general/foreclosure_reg.php)

Basically, by law, all individuals and businesses offering mortgage-foreclosure consulting, loan-modification and foreclosure-assistance services must register with Brown's office and post a $100,000 bond in addition to paying an $850 application fee. You can read the full law here: http://ag.ca.gov/consumers/pdf/mortgage_civil_law.pdf

What do you think will be the impact on the real estate consultants and bird dogs in CA? The law text mostly had to do with individuals charging a fee to homeowners upon completion of services. From my understanding (feel free to correct me if I'm wrong) does this conversely mean that if one's services are free to homeowners and one does not charge them out of pocket for services rendered, one doesn't need a bond or application?

My cause for concern is that I run a company that is very similar to 1-800 dentist, service-magic, and angie's list but with foreclosure professionals in the So. Cal area (there is no charge at all to homeowners for our services). Not only do we conduct full background checks, we also require a minimum number of lender transactions, confirm all closed transactions, interview at least three references, and consistently survey client satisfaction. However, we first financially pre-qualify homeowners and present them with their options in order to connect them to the right professional. We get paid by other professionals for the referral and fully disclose this to our clients.

What are your thoughts? Any feedback about this law would be greatly appreciated.

[Bill Gulley]

Hi, you are being compensated, just not by the owner. I was not able to pull up the site so I can't read it. Usually, as in most states, exceptions are made for non-profits, Realtors, attorneys, etc.

I would suggest that you contact the regulator and explain fully what you do and how and where your income is derived. Ask for a Letter of Opinion and Determination as to the applicablility of the statute to your business dealings. I have been able to acquire opinions in some matters by telephone. It won't hurt to ask and they won't hunt you down to see if you comply if that is the opinion, they have better things to do. Good Luck, Bill