modification help

Is the California DRE Even Relevant Anymore?

Since starting MFI-Mod Squad back in January, I have witnessed a lot of craziness from illegally-run loan modification companies. They’re often staffed by convicted felons, unlicensed lawyers, or government bureaucrats who confuse motion with action. 

 This has been most prevalent in California, which became a mecca for illegally-run and shady loan modification companies within the past twenty-four months. Under California statute, enforcement of the regulations that govern mortgage lending and modifications was the responsibility of the Department of Real Estate (DRE). 

 From November 2007 until September 2008, DRE did nothing to reign in the loan modification industry. It wasn’t until complaints began pouring in about these companies that DRE began requiring modification companies who charge an advance fee to have an advance fee agreement on file with them. That, however, didn’t stop the unethical practices committed by the vast majority of these companies. DRE’s advance fee requirements were hardly enforced.

 A perfect example of this was Loan Safe Solutions. The company was operated by Moe Bedard, a convicted felon whose DRE license was terminated when he was incarcerated. Bedard began Loan Safe Solutions after he left prison and operated it until May 2009, when his company lost its office space through eviction. It was commonly known in the modification and lending industry since the spring of 2008 that Bedard was operating outside DRE guidelines, but DRE did nothing. 

 See http://www.mfi-modsquad.com/would-you-hire-this-guy-to-do-your-loan-mod

 There are other shady companies that DRE did nothing to punish. Federal Loan Modification is another example. It was finally shut down after it was fined to death by the Federal Trade Commission (FTC). The FTC acted after being grilled by reporters about MFI-Mod Squad’s list of the twenty worst loan modification companies, which was published in April.

 See http://www.mfi-modsquad.com/bad-loan-modification-companies

 It wasn’t until early this year that DRE initiated a statewide dragnet against these companies because DRE was trying to keep the Governator’s bean counters at bay. Schwarzenegger’s people were looking for ways to do budget cuts and eliminate California’s massive $38 billion deficit. 

 Though good for a few blurbs on the Internet, this dragnet did little to actually scare these companies, which were working with equally unscrupulous law firms. 

 Due to actions initiated by other entities, the situation did eventually improve over the past several months. The California Attorney General’s office stepped in and began filing lawsuits against loan modification companies and requiring that $100,000 surety bonds be filed with their office.  The State Bar of California elected a new president. Her core mission was to bring integrity back into the legal profession, beginning with attorneys who charged advance fees for loan modifications and then failed to perform any work on the files. 

 Then, of course, SB 94 was introduced and was then signed by Schwarzenegger last week.  

With all these issues, is it fair to ask if DRE is even relevant? If they are, how can they be made more effective? Do they need new leadership and a new mandate?