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Legislature passes bill prohibiting up-front payments for foreclosure consultants

The Legislature passed on April 19 a bill that would prohibit consultants from requiring payment up-front in foreclosure cases, one of several measures aimed at helping homeowners worst hit by the housing slump.

The Senate passed the measure, S1130, by a vote of 23-5.

Phoenix has one of the highest foreclosure rates in the nation, and the state is replete with stories about homeowners who were offered help by individuals and firms who failed to deliver after demanding-and getting upfront payments.

“Why do we want to feed these people business if we can’t put some restrictions on (them) and make them responsible for what they do and not be paid until they get the service done,” said Sen. John Nelson, the bill’s author.

“It won’t stop the foreclosures but it will stop the abuse… when they are offering a service that they may not be able to provide and they’re getting paid upfront,” he added.

The bill also prohibits consultants from collecting fees that haven’t been fully disclosed and allows the homeowner to bring charges against the consultant and recover damages, attorney’s fees and costs.

Additionally, the bill bans consultants from accepting power of attorney other than to have the ability to inspect documents.

A consultant who engages in fraud or deceit under the provisions of the bill faces a Class 1 misdemeanor.

The bill’s next stop is Gov. Jan Brewer’s desk; Brewer is expected to sign the bill.

Arizona Senate, April 19, S1130
Paula Aboud
Carolyn Allen
Manny Alvarez
Frank Antenori
David Braswell
Ed Bunch
Bob Burns
Meg Burton-Cahill
Ken Cheuvront
Jorge Garcia
Linda Gray
John Huppenthal
Leah Landrum Taylor
Barbara Leff
Linda Lopez
Debbie McCune Davis
Al Melvin
Richard Miranda
John Nelson
Steve Pierce
Rebecca Rios
Jay Tibshraeny
Thayer Verschoor
Sylvia Allen
Ron Gould
Chuck Gray
Jack Harper
Russell Pearce

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