A recorded Notice of Default is a public document, and in Riverside, Orange, and San Diego County the people who read that list every week include a specific category of business California regulates by name: the foreclosure consultant. The law gives an owner real protection against being charged before help arrives, and a real right to walk away from a bad contract. The table is the protection in one place.
| Protection | What it means | Where it is written |
|---|---|---|
| No advance fees | A consultant cannot collect any compensation until every promised service is fully performed | Civil Code 2945.4 |
| The right to cancel | You may cancel a contract until midnight of the fifth business day after signing | Civil Code 2945.3 |
| No power of attorney | A consultant cannot take a power of attorney from you for any purpose | Civil Code 2945.4 |
| No stake in your house | A consultant cannot acquire any interest in the residence from an owner they contracted with | Civil Code 2945.4 |
| A named enforcement agency | The Department of Real Estate has pursued and disciplined foreclosure consultants under this law | DRE enforcement history |
Civil Code 2945.1 defines a foreclosure consultant broadly: anyone who offers, for compensation, to stop or postpone a sale, obtain forbearance, help with reinstatement, extend a redemption period, or arrange a loan to help you keep the house. It exempts licensed attorneys acting within their practice, licensed real estate brokers and lenders acting within their license, and anyone who already holds a secured interest in the property. Almost everyone else fits the definition, whether they call themselves a consultant, a coach, or a rescue specialist.
"The DRE has aggressively pursued loan-modification scammers who prey on vulnerable and financially stressed homeowners," California's Real Estate Commissioner said in a consumer warning, "and those peddling false hope by promising mortgage relief with a forensic audit will be scrutinized." The pattern the DRE was describing then, fees collected up front for promises that were never kept, is the same pattern the statute was written to stop.
The five business days, and how to actually use them
Civil Code 2945.3 requires every foreclosure consultant contract to state, in conspicuous 10 point boldface type near your signature, that you may cancel at any time before midnight of the fifth business day after signing. The contract must include a detachable cancellation form, and you can cancel by mail, telegram, facsimile, or email to the address the contract lists. No reason is required. If a contract does not contain this notice at all, that omission is itself a violation worth raising with the Department of Real Estate.
"The DRE has aggressively pursued loan-modification scammers who prey on vulnerable and financially stressed homeowners."
Jeff Davi, California Real Estate Commissioner, in Attorney General consumer warning, February 2010
What a foreclosure consultant may never do, by section
| Prohibited act | Civil Code 2945.4 |
|---|---|
| Collect any fee before every promised service is fully performed | Yes |
| Take a power of attorney from the owner, for any purpose | Yes |
| Acquire any interest in the residence from an owner under contract with them | Yes |
| Take a wage assignment or other security to secure payment | Yes |
| Receive undisclosed payment from a third party connected to the services | Yes |
| Arrange or assist with releasing surplus funds after a trustee's sale | Yes |
A consultant is not the only version of this scheme
Some of what shows up after a Notice of Default is recorded does not call itself a foreclosure consultant at all. It asks for the deed instead of a fee, with a promise you can rent the house back and buy it again later. Our guide to signing over your deed covers the separate protections California built for that version, including the same idea in a different form: a legally required waiting period before anything can become final.
What actually helps, at no cost
| Resource | What it does | Cost |
|---|---|---|
| A HUD-approved housing counselor | Reviews your specific letters and options, without a sales pitch | Free |
| The California Department of Real Estate | Investigates licensees and unlicensed activity, and takes complaints | Free to file a complaint |
| Your own servicer's loss mitigation department | The actual decision maker on reinstatement, modification, or forbearance | Free to contact directly |
| A licensed real estate attorney | Can review a contract before you sign it, not after | Often a modest consultation fee, sometimes free |
The honest version of help
A real cash sale closes through a licensed escrow and title company, pays the lender at closing, and asks for nothing up front. We buy houses as-is for cash across Southern California, from the Temecula Valley and Riverside County to Orange County and North County San Diego, with no fee to request an offer and no pressure attached to it. Get a no-obligation cash offer and compare it against anything that asked for money or a signature first.
Frequently Asked Questions
Where do I verify a real estate license in Riverside, Orange, or San Diego County?
The California Department of Real Estate maintains a statewide license lookup at dre.ca.gov that covers every county, so a Temecula address in Riverside County, an Irvine address in Orange County, or an Oceanside address in San Diego County are all checked the same way. A foreclosure consultant itself is not a licensed category the DRE issues, which is part of why the statute exists; what you can verify is whether the person claiming to be a broker, agent, or attorney actually holds that license, and whether it carries any discipline.
Can a foreclosure consultant ask for a small fee just to get started?
No. Civil Code 2945.4 prohibits collecting any compensation until every service promised in the contract has been fully performed, with no exception for a small or partial fee. An upfront charge of any size from someone fitting the statute's definition is a violation, whatever it is called.
What if I already signed and paid a foreclosure consultant?
If it has been less than five business days, cancel in writing immediately using the method the contract's cancellation form describes. Beyond that window, Civil Code 2945.6 provides civil remedies, including treble damages and attorney's fees, for violations of the foreclosure consultant statute, and a complaint to the Department of Real Estate or the Attorney General's office is worth filing regardless of the dollar amount involved.
Does this law cover loan modification companies too?
Generally yes, if they are offering, for compensation, to help stop a foreclosure, obtain a modification, or negotiate with your lender, and they are not a licensed attorney or an entity specifically exempted by Civil Code 2945.1. Advance fees for loan modification assistance specifically are also independently restricted, which is why the DRE's warnings have repeatedly named loan modification companies as a common source of complaints.
About Foreclosure Rescue Scams in California
- Civil Code 2945.1, the foreclosure consultant definition
- Civil Code 2945.3, the right to cancel
- Civil Code 2945.4, prohibited acts
- California Department of Real Estate, Consumer Alerts
- HUD, free housing counseling
Sources: Civil Code 2945.1, 2945.3, 2945.4, 2945.6, California Department of Justice, Commissioner Jeff Davi, February 2010, HUD