1. 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. Definitions What 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 Fees by 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. Advance Fee Contracts Submitted to the DRE 0 50 100 150 200 250 300 6/087/088/089/0810/0811/0812/081/092/093/094/09 5 1 28 0 42 3 52 4 115 5 147 23 226 56 236 96 243 68 291 132 225 232 Month/Year Total Contracts Submitted = 1610 Total No objection letters issued = 620

8. Advance Fee Agreement Listing www.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