California law prohibits any person or company from collecting advance fees to help negotiate mortgage loan modifications.  This law, California Civil Code Section 2944.7, applies to realtors and attorneys. Despite this law, homeowners are still paying thousands of dollars to these scam artists who collect and then fail to perform or even disappear.  The lender or servicer holding the mortgage is proceeding with foreclosure, while the homeowner assumes the scam artists are protecting them.

The Santa Clara County District Attorney has actively pursued these law breakers.  Two recent cases brought by the DA’s Real Estate Fraud Unit illustrate the harm caused by these illegal practices.

In one case, the co-owners of M & R Contemporary Solutions, pled guilty to theft and foreclosure fraud charges related to a phony scheme that bilked approximately 400 mainly Hispanic homeowners of close to $2 million over a one year period.  Homeowners paid fees in the range of $3000 to $10,000 based on promises to save their homes, only to receive no help.

In another case, real estate agent Michael Mendoza was charged with six separate counts of collecting illegal fees and using unlicensed agents.  He and his company advertised widely, particularly on Spanish language radio and television stations throughout the Bay Area.

Even though the California law prohibiting advance fees has been in place since 2009, the Foreclosure Help Center continues to receive calls from homeowners who have already paid these illegal fees.


Free counseling from a HUD-approved agency is available through the Foreclosure Help Center.  Call the Center at 408-293-6000.

If you have paid an illegal advance fee, you can follow up with the District Attorney’s Real Estate Fraud Unit at www.santaclara-da.org.




Foreclosure rates in Silicon Valley are not dramatically better than those in other Northern California areas.

Silicon Valley has an image as an economic powerhouse, with high levels of employment and increasing home values. However, the foreclosure rate for the metropolitan area that encompasses Silicon Valley is not noticeably lower than the rates for other areas considered to be hard hit by the foreclosure crisis. A report just released by the Foreclosure-Response organization provides the foreclosure rates for all 366 U.S. Metropolitan areas as of September 2013. Full report. The current foreclosure rate for the San Jose-Sunnyvale-Santa Clara Metro area is 2.3%, which is the same rate calculated for the SF-Oakland Metro area.  The Silicon Valley rate is just below the 2.4% rate for Chico, the 2.5% rate for Bakersfield and the 2.7% rate for Sacramento. The rate for Modesto is 3% and Stockton is 3.1%. None of the rates in these hard hit areas are dramatically higher than Silicon Valley.

The report also measured the improvement in the “serious delinquency” rate since the height of the foreclosure crisis in 2009. Serious delinquency is defined as 90 or more days delinquent. The improvement in the delinquency rate in Silicon Valley is actually less than the improvement in other metro areas. The San Jose Metro area serious delinquency rate in December 2009 was 7.8%. It is now 4%. In contrast, the serious delinquency rate for Stockton dropped from 18.5% to 6.1%. In the Modesto Metro area, the delinquency rate fell from 17.3 to 5.8%. As is true in the comparative foreclosure rates, the current delinquency rates in all three of these areas are now similar, contrasting with the sharply higher delinquency rates for these other areas in 2009.


As we all know, the mortgage scam artists constantly invent ways to attract paying customers. Here is a new one to avoid.

Several laws protect homeowners facing foreclosure by requiring lenders and loan servicers to give the homeowner a “single point of contact” within their organizations. This protection is crucial to prevent harmful lender practices such as dual tracking and misplaced modification applications.

We have now learned that profit-motivated third parties are contacting homeowners and leading them to believe they are the point of contact for the lenders and servicers who hold their mortgages. They are asking for private information from the homeowners, and may ultimately ask for fees. As a minimum, this scam activity can confuse homeowners and lead them to waste time that should be spent contacting legitimate representatives.
Homeowners should never deal with someone directly calling who is claiming to be a point of contact.

A legitimate point of contact representative should be identified in an official letter from the lender or servicer, with appropriate contact details included.

This type of scam is another good reason to contact a HUD-approved counseling agency. That agency can communicate with the lender or servicer to verify the point of contact representative and to submit the homeowner’s personal information safely and confidentially. A homeowner who is contacted by one of these scam artists should report the contact to his or her counseling agency, a non-profit legal services agency, or the local district attorney.

Homeowners May Face An Unexpected Tax Bill

The Mortgage Forgiveness Debt Relief Act has been allowed to expire.  Before this law was passed in 2007, a homeowner who had a portion of his or her mortgage written off by a lender was considered to have received a taxable benefit equal to the amount of debt forgiven.   This rule applied to short sales, some types of modifications, and other forms of foreclosure work out options where a portion of the mortgage debt was waived.  As a result, before this Act, a homeowner could lose his or her home and still pay taxes on the amount of the home mortgage that was unpaid.  The Mortgage Forgiveness Debt Relief Act waived the taxable status of the event, which has been an important incentive to utilize foreclosure prevention options.

The Act had been routinely extended from 2007 until the end of 2013, but has now been allowed to expire.  There are bills pending in congress to re-authorize the Act, and there is another IRS rule for “insolvency” that could protect some of the same transactions.  However, every homeowner facing foreclosure should seek advice from a tax professional to address the implications of the expiration of the Act.  Many members of the real estate and mortgage industry are not aware of these implications.

For more details, click here,
For a different point of view, see the discussion here, 

Join us for our Housing Stabilization Workshop Series!

Join us this weekend Saturday, September 28th, 2013 at MACSA for our Housing Stabilization Workshop Series! This weeks workshop is titled “Taking over your finances: How to live within your means”. This workshop is FREE to all. There will be light refreshments and snacks. The workshop will be located at 660 Sinclair Drive, San Jose, CA 95116. Please call 408-293-6000 to register!


¡Únase a nosotros este fin de semana Sábado, 28 de septiembre 2013 a MACSA para nuestro Taller de Estabilización de Vivienda!  Este taller se titula “Hacerse cargo de sus finanzas: ¿Cómo vivir dentro de sus medios”. Este taller es gratuito para todos. Habrá refrescos y aperitivos. El taller se encuentra a 660 Sinclair Drive, San Jose, CA 95116. Por favor llame 408-293-6000 para registrarse!


Únase a nosotros este fin de semana Sábado, 28 de septiembre 2013 a MACSA para nuestra vivienda Estabilización Workshop Series! Este taller semana se titula “Hacerse cargo de sus finanzas: ¿Cómo vivir dentro de sus medios”. Este taller es gratuito para todos. Habrá refrescos y aperitivos. El taller se encuentra a 660 Sinclair Drive, San Jose, CA 95116. Por favor llame 408-293-6000 para registrarse!