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(New CA Law Amends Sections 1632, 2945.2, 2945.3, and 2945.4 of, and adds Section 2945.45 to, the Civil Code, relating to mortgages.)

Existing law defines a foreclosure consultant as a person who offers, for compensation, to perform specified services for a homeowner relating to a foreclosure sale.

Existing law prohibits a foreclosure consultant from entering into an agreement to assist the owner in arranging, or arrange for the owner, the release of surplus funds prior to 65 days after the trustee’s sale is conducted. This act prohibits a foreclosure consultant from entering into such agreement at any time.

Existing law allows a homeowner to cancel a contract with a foreclosure consultant within three days after signing the contract by providing written notice of the cancellation at the address provided by the foreclosure consultant. Existing law requires that the contract be written in the same language as principally used by the foreclosure consultant to describe his or her services or to negotiate the contract. Existing law further prohibits a foreclosure consultant from taking any power of attorney from an owner, except to inspect documents as provided by law.

This act allows a homeowner to cancel a contract with a foreclosure consultant within five days after signing the contract, and to do so by mail, e-mail, or facsimile. It also requires that the foreclosure consultant, in specified circumstances, to provide the owner before the owner signs the contract with one or more copies of a completed contract written in the language specified by the homeowner. This act further prohibits a foreclosure consultant from taking any power of attorney from an owner for any purpose.

This act also requires a foreclosure consultant to register with the Department of Justice (DOJ) in accordance with certain requirements, and to obtain and maintain, a surety bond of $100,000. A violation of these provisions would be a crime. This act permits the DOJ to refuse to issue, or to revoke, a foreclosure consultant’s registration for any violation of the law regulating foreclosure consultants.

(This article is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer.  If you have any questions about this Article, please call or e-mail N. Stephen Vokshori, Esq. (213.785.5366/stephen@voklaw.com) or any other member of Vokshori Law Group.)