By Norma Garcia, Senior Attorney

The Front Page of the November issue of the California Bar Journal, an official publication of the State Bar of California, flashed a headline that anyone concerned about protecting consumers from loan modification scams should know about. In its crackdown on lawyers aggressively peddling “loan modifications for a fee” the State Bar of California has obtained the resignations of several attorneys and has also placed others on inactive status to prevent “substantial threats to the public.”

This is welcome news and a great step forward to rid the public of attorneys who are taking advantage of the current foreclosure crisis to siphon fees for nothing in return from unsuspecting homeowners who are desperately trying to avoid foreclosure. We should applaud the State Bar of California for taking these actions to protect vulnerable homeowners. As a California attorney, I also salute the State Bar of California for cleaning up the profession to preserve the integrity of the important work we do.

In a related matter, Governor Schwarzenegger signed a new law, Senate Bill 94, on October 11, 2009 that prohibits lawyers and real estate agents from taking advance fees for doing foreclosure related work. The new law also requires new written disclosures notifying the homeowner that loan modification services are available for free through agencies approved by U.S. Department of Housing and Urban Development (HUD) and requires translated copies of the disclosure if loan modification services are offered in Spanish, Chinese, Vietnamese, Korean or Tagalog. The law is effective immediately. Click here to read the State Bar of California’s FAQ on Senate Bill 94.