1. Advance Fees & Loan Modifications A FOCUS ON CONSUMER PROTECTION

2. Purpose of the Advance Fee Law • Legislation created in the 1950’s • To ensure brokers perform the services promised for the Advance Fee

3. DefinitionsWhat is an Advance Fee? • The collection of an upfront fee for the purpose of promoting the sale or lease of real property • The collection of an upfront fee for the purpose of performing services for borrowers or lenders in connection with loans secured by real property

4. Who can Collect Advance Fees for Loan Modification Services? • Attorneys who are providing legal services (acting within the scope of his or her license) • Real Estate Brokers • Provided the agreement has been vetted by the DRE • Provided a Notice of Default has not been filed

5. Requirements for the Collection of Advance Feesby a Real Estate Broker Must submit agreement and solicitation materials to DRE to ensure the DRE does not object to their use Agreement must specify the services to be rendered Must deposit the advance fee into a trust account Only expend fee on the promised services Must provide the principal with an accounting of the advance fee

6. Requirements for the Collection of Advance Fees • Refund any unearned portion of the advance fee • No advance fee may be collected after a NOD has been recorded • Exceptions to Advance Fee Requirements • Upfront appraisal and credit report fees • Upfront tenant “screening fees” for residential rentals

7. 291 300 Total Contracts Submitted = 1610 Total No objection letters issued = 620 243 250 236 232 225 226 200 147 150 132 115 96 100 68 56 52 42 50 28 23 5 5 4 3 1 0 0 6/08 7/08 8/08 9/08 10/08 11/08 12/08 1/09 2/09 3/09 4/09 Month/Year Advance Fee Contracts Submitted to the DRE

8. Advance Fee Agreement Listingwww.dre.ca.gov/mlb_adv_fee.html

9. Desist and Refrain Orders and/or Accusations for Loan Modification Activities http://www.dre.ca.gov/cons_DandR.html

10. Consumer Education Consumer Alert – Advance Fees and Loan Modification Services http://www.dre.ca.gov/cons_adv_fees_alert.html

11. Consumer Protections http://www.dre.ca.gov/pre_psa.html

12. Conclusion • Be a resource for Consumers • Educate consumers to: • Know the Law and their Rights • Understand Alternatives Log-on, Look’em up, Check’em out