Cal. Codes » Civil Code / DIVISION 3. OBLIGATIONS / PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS / TITLE 14. LIEN / CHAPTER 2. Mortgage / ARTICLE 1. Mortgages in General
California Codes

Cal. Civil Code § 2944.7 (2026)

Mortgages in General

✓ current as of May 2026
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(a)Notwithstanding any other law, it shall be unlawful for any person who negotiates, attempts to negotiate, arranges, attempts to arrange, or otherwise offers to perform a mortgage loan modification or other form of mortgage loan forbearance for a fee or other compensation paid by the borrower, to do any of the following:

(1)Claim, demand, charge, collect, or receive any compensation until after the person has fully performed each and every service the person contracted to perform or represented that he or she would perform.

(2)Take any wage assignment, any lien of any type on real or personal property, or other security to secure the payment of compensation.

(3)Take any power of attorney from the borrower for any purpose.

(b)A violation of this section by a natural person is punishable by a fine not exceeding ten thousand dollars ($10,000), by imprisonment in the county jail for a term not to exceed one year, or by both that fine and imprisonment, or if by a business entity, the violation is punishable by a fine not exceeding fifty thousand dollars ($50,000). These penalties are cumulative to any other remedies or penalties provided by law.

(c)In addition to the penalties and remedies provided by Chapter 5 (commencing with Section 17200) of Part 2 of Division 7 of the Business and Professions Code, a person who violates this section shall be liable for a civil penalty not to exceed twenty thousand dollars ($20,000) for each violation, which shall be assessed and recovered in a civil action brought in the name of the people of the State of California by the Attorney General, by any district attorney, by any county counsel authorized by agreement with the district attorney in actions involving a violation of a county ordinance, by any city attorney of a city having a population in excess of 750,000, by any city attorney of any city and county, or, with the consent of the district attorney, by a city prosecutor in any city having a full-time city prosecutor, in any court of competent jurisdiction pursuant to Chapter 5 (commencing with Section 17200) of Part 2 of Division 7 of the Business and Professions Code.

(d)Nothing in this section precludes a person, or an agent acting on that person’s behalf, who offers loan modification or other loan forbearance services for a loan owned or serviced by that person, from doing any of the following:

(1)Collecting principal, interest, or other charges under the terms of a loan, before the loan is modified, including charges to establish a new payment schedule for a nondelinquent loan, after the borrower reduces the unpaid principal balance of that loan for the express purpose of lowering the monthly payment due under the terms of the loan.

(2)Collecting principal, interest, or other charges under the terms of a loan, after the loan is modified.

(3)Accepting payment from a federal agency in connection with the federal Making Home Affordable Plan or other federal plan intended to help borrowers refinance or modify their loans or otherwise avoid foreclosures.

(e)This section shall apply only to mortgages and deeds of trust secured by residential real property containing four or fewer dwelling units.

Notes of Decisions
Cited in 7 cases (1 in the last 5 years), 2014–2023 · leading case: Marilyn Scheer v. State, 819 F.3d 1206 (9th Cir. 2016).
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Marilyn Scheer v. State, 819 F.3d 1206 (9th Cir. 2016). “In August 2011, the arbitrator concluded that although Scheer performed competently, she violated California Civil Code Section 2944.7(a) by receiving advanced fees for residential mortgage modification services.”
In re Branch, 504 B.R. 634 (Bankr. E.D. Cal. 2014). · cites it 2× “California Civil Code § 2944.7 Does Not Require A Finding That The $12,000.”
In the Matter of Mark Andrew Brunty, 769 S.E.2d 426 (S.C. 2015). “By charging and collecting an upfront fee, respondent violated California Civil Code § 2944.7. In addition, respondent’s conduct violated these California Rules of Professional Conduct: 1-400, 3-110, 3-500, 3-700, 4-100, and 4-200.”
Vokshori Law Grp., APLC v. Henriquez (In re Henriquez), 559 B.R. 900 (Bankr. C.D. Cal. 2016). · cites it 2× “6; and (4) Plaintiff loses because it did not fully perform each and every service it was required to perform under California Civil Code section 2944.7—and therefore cannot legally charge Defendant because one of the ser-vices it was required to perform was ob-taining a loan…”
Marilyn Scheer v. David Pasternak (9th Cir. 2018). “The district court properly dismissed Scheer’s constitutional challenge to Cal. Civil Code § 2944.7 as barred by issue preclusion because the claim was predicated on issues that were resolved against Scheer in a prior state court action.”
In re Bacon, 799 S.E.2d 290 (S.C. 2017). “By charging and collecting an upfront fee in a loan modification case, respondent admits he violated California Civil Code § 2944.7. Furthermore, respondent admits his conduct constituted the unauthorized practice of law in violation of § 6125 of the California Business and…”
Cabardo v. Patacsil (Bankr. E.D. Cal. 2023). “The arbitrator determined that the attorney violated 16 California Civil Code § 2944.7(a) by receiving advanced fees for 17 residential mortgage modification services and ordered the attorney to 18 refund the entire $5,500 and also ordered the attorney to pay the 19 client the…”
Cal. Civil Code § 2944.7(a): 2 cases
Marilyn Scheer v. State, 819 F.3d 1206 (9th Cir. 2016). “In August 2011, the arbitrator concluded that although Scheer performed competently, she violated California Civil Code Section 2944.7(a) by receiving advanced fees for residential mortgage modification services.”
Cabardo v. Patacsil (Bankr. E.D. Cal. 2023). “The arbitrator determined that the attorney violated 16 California Civil Code § 2944.7(a) by receiving advanced fees for 17 residential mortgage modification services and ordered the attorney to 18 refund the entire $5,500 and also ordered the attorney to pay the 19 client the…”
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