I’ve had loads of people ask me about Loan Modification lately, and like many other responsible licensees have done, I have contacted the CA Dept of Real Estate in order to determine what choices are available for homeowners who are having trouble making their mortgage payments, due to a rate reset, loss of income, etc. There are of course, mortgage brokers who went into the loan mod business, which some people are proclaiming “The New Subprime”, and then there are “attorney-based” Loan Mod shops as well. These days, In order for a broker to accept fees, they need to file an advance fee agreement with the DRE, and with that comes an audit. The headache I see coming however, is not with the brokers, but with the shops who claim to work with an attorney in order to justify taking a fee up-front, many times without even sending the client’s docs to the underwriters. This brings up many questions, such as: can an attorney hire another company, to collect fees for the law firm?, if so, should they be in the law offices?  do these “consultants” need to be licensed? It seems to me that many of these shops are asking for fees ranging from $3000-$5,000 without even seeing the client’s financials first, which can result in client “slammed”  into a loan mod for the sake of a quick commission, when the client who has good credit, steady employment, equity and so on might have qaulified for another option, such as  one of the new FHA programs, or a re-fi. There are no clear answers according to the DRE, who suggested I call the CA State Bar, who then told me to call the DRE. My feeling is that many of these attorney-based shops are going to be under as much scrutiny, if not more than the brokers doing loan mods. The new year should be a very interesting one indeed.