Introduction to Sample Advance Fee Agreement

Important Notice: Advance Fees for Loan Modifications Now Prohibited (Effective immediately)
On October 11, 2009, Governor Schwarznegger signed Senate Bill 94 (Calderon), and the legislation took effect immediately upon his signature. Read important notice.

In order to facilitate a shortened loan modification services advance fee contract review process, the Department of Real Estate has prepared for use by real estate brokers a sample/model “Advance Fee Agreement for Loan Modification Services” and a sample/model verified accounting for advance fees form (please see below).

READ THESE INSTRUCTIONS CAREFULLY BEFORE SUBMITTING YOUR AGREEMENT

If a broker elects to use the sample/model advance fee agreement, the broker must first do the following to effect approval from the Department of Real Estate:

1. Using the sample advance fee agreement, fill in
   
   
   1. the name of the broker (or the broker’s licensed corporation if a corporation is providing the services) and the fictitious business name (d.b.a.), if appropriate (in the opening paragraph),
   
   
   
   2. the amount of the advance fee to be collected (in Paragraph B1),
   
   
   
   3. the trust fund bank account number and depository (in Paragraph B2), and
   
   
   
   4. the dollar amounts equaling the respective percentages of the advance fees (in Phase I Subparagraph E and Phase II Subparagraph F).



2. Using the sample accounting format, fill in
   
   
   1. the name of the broker (or the broker’s licensed corporation if a corporation is providing the services),
   
   
   
   2. the broker’s address,
   
   
   
   3. the trust fund account number and depository, and
   
   
   
   4. the amount of the advance fee to be received.



3. The balance of the information in the advance fee agreement will be completed at the time the agreement is signed with the principal.



4. Submit the agreement and accounting format to the Department of Real Estate, Mortgage Loan Activities Unit, and P.O. Box 187000, Sacramento, CA 95818-7000. Do not fax the agreement. For an expedited review, no changes (other than those stated above), additions or deletions may be made. After the Department’s review, the broker will receive a no objection letter. The broker may then use the agreement with each of his or her principals (clients) by completing the appropriate information.



5. If the required information in items 1 or 2 is not included, the agreement will be returned.

The Department does not require brokers to use this sample/model agreement. However, those wishing to submit their own advance fee agreement formats will be subject to a review process that may be lengthy and involve several revisions causing delays before the agreement can be used and advance fees collected.

Whether submitting the sample agreement or their own, brokers must also submit any advertising or promotional materials that will be used to promote the advance fee services.

The Department does not approve, endorse, recommend or make any representation about the sample advance fee agreement or its terms or any aspect of a licensee’s business practices. The sample agreement is provided solely in order to facilitate a shortened contract review process.

• Sample Advance Fee Agreement
• Sample Verified Accounting for Advance Fees