Changes to the loan mod law

I have to admit that I was a little freaked out at the seminar on the loan modification business that I attended last Friday. We were walked through the new revisions to the foreclosure rescue statute in Florida (501.1377) that pertains to loan modification and foreclosure rescue services.

Did you know that Florida loan modification agents (not attorneys) cannot charge "up-front" for any loss mitigation services as of July 1? And, after January 1, the law changes again to protect the Florida homeowner even more - foreclosure rescue consultants in Florida will not be able to charge anything until the homeowner receives a material benefit; in other words, is approved for a loan modification or some other loss mitigation solution.

Since that process can take months, it's a big gamble for any loan mod agent to take for months of work without being able to cover his or her costs with a nominal application fee. Attorneys will be similarly restricted. I don't know any attorneys who would work for free.

I predict a lot of loan mod agents will either break the new law on a daily basis or decide that they can't make a living under the new structure here in Florida. I also predict a heavy lobbying effort by attorneys and mortgage brokers to have this line-item vetoed by Governor Christ.

I have not looked closely at other states' laws but my understanding that, with the exception of California, most states have not gone this "hard-core" in this direction yet. Stay tuned.