How the Senate Bill 94 Can Affect a Californian Loan Modification Attorney


California has been declared as one of the 20 states in the country with a high foreclosure and unemployment rate. The Department of Treasury even allotted billions of dollars for loan modification programs, mortgage subsidies, and rental assistance to homeless Americans living in these regions. However, the Obama's home rescue program has been proven futile due to the number of unsuccessful requests. As a result, many desperate homeowners turn to an attorney for foreclosure prevention assistance. Due to the number of foreclosure filings in the country since the beginning of the mortgage crisis, the loan modification industry has boomed. Along with the popularity of loan modification companies, fraudulent individuals has lurked the industry as well to take advantage of other people's situation.

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The Federal Trade Commission has been receiving thousands of complaints from homeowners across the United States claiming that their loan modification attorney or expert has required large upfront fee to clients. These fraudulent individuals take upfront fees and never render any form of services leaving these homeowners more desperate in saving their properties. In order to stop the growing number of fake firms, the senate has passed a new bill called the SB 94. Senate Bill 94 is authored by a Californian Senator and the current Chairman of the Senate Banking Committee, Ron Calderon.

The law prohibits all experts to ask for up front fees saying that it is the only surest way to prevent fraud in the industry. Only after the service has been rendered and when a successful loan modification takes place will the client pay for the assistance. The problem with this new law is that lawyers are put in a dangerous side in the agreement. Although the homeowner's rights are being upheld, SB 94 put lawyers as the unsecured creditors of their clients. Mortgage lenders are being paid out of escrow during the end of the contract; lawyers on the other hand must send a bill to the homeowner without securities.

When a homeowner fails to pay off his debt to the attorney, the lawyer will be left with no choice but to sue his client. This is not beneficial for both sides but the lawyer must do something in order to get his rightful compensation. This process will turn the table around; lawyers even predict that if the law stays, more and more legal professionals will have to close their doors to homeowners needing help for fear of non-remuneration at the end of the transaction. Their fear is logical; troubled homeowners have so little to pay for their mortgages which is why naturally, attorney's fees without securities will be put practically last in the payment list.


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