2
Feb
2010
Q&A Regarding Handling Loan Modifications
Question: I am a licensed real estate broker. Our clients have asked if I can assist them with regard to applying for a loan modification. Can I assist them? If so, how much assistance can I provide?
Answer: Yes, you may assist your clients in applying for a loan modification. You can assist them in assembling paperwork and preparing applications. You can also communicate with the bank on their behalf. However, it is recommended that a real estate agent refrain from reviewing and analyzing amended loan documents from the lender. These actions would constitute practicing law and can lead to liability. If a client believes that a loan is being modified and they are being given certain terms, if the documents do not reflect those terms, the client could assert a claim against the agent for mishandling of the loan modification. It is best to refer the amended loan documents to an attorney for review.
Question: Can I accept a retainer or prepayment for these services?
Answer: No. The Legislature recently passed Senate Bill 94 effective October 11, 2009, which prohibits real estate professionals, including real estate agents and attorneys, from accepting retainers to perform services relating to loan modifications. In addition, agents cannot accept money for services, which have not been rendered unless they have received pre-approval from the California Department of Real Estate and have a separate client trust account. If agents are inclined to accept retainers for work, they are strongly advised to review the DRE regulations as this is a highly regulated area.
Shannon B Jones, is a partner at Shannon B. Jones Law Group. The Law Group currently represents over 5,000 real estate agents in Northern California. Ms. Jones is a member of the California Association of REALTORS® Strategic Defense Panel and is endorsed by the California Association of REALTORS®. She also is the author of the best-selling real estate book, “A Real Estate Agent’s Practical Guide to Avoiding Litigation”.
The information herein is not intended to offer legal or financial advice. Please consult with author or another appropriate professional for specific and/or more information. The information below provides varying degrees of perspective and may vary with market conditions. While some are legal points, many of the guidelines are marketing or practical points.