For immediate release: December 10, 2008
Department of Commerce advises consumers to work with their loan servicer or the Minnesota Home Ownership Center before paying fees for loan modification
(St. Paul, MN…) The Minnesota Department of Commerce today urged consumers to check the license status of any company offering mortgage loan modification services in Minnesota. More importantly, before paying an upfront or advance fee for such services, consumers should first consider working directly with their loan servicer or contacting the Minnesota Homeownership Center to take advantage of their free loan modification service.
A growing number of consumers are being contacted by companies or individuals offering loan modifications. A loan modification is an agreement between the homeowner and the mortgage servicer to permanently change one or more of the terms of the mortgage contract to make payments more manageable. Modifications can include lowering the interest rate, extending the term of the loan, or adding missed payments to the loan balance.
The Department of Commerce requires persons who engage in loan modifications to have a residential mortgage originator license pursuant to Minnesota Statutes Chapter 58. Individuals offering or negotiating loan modifications are indirectly acting as mortgage originators. In addition to licensing requirements, all individuals who directly or indirectly negotiate loan modifications for consumers are required to comply with certain standards of conduct outlined in state law.
The loan modification company may propose to communicate directly with the homeowner and the homeowner's lender in order to negotiate the terms of a loan. Some loan modification companies will charge a homeowner an upfront or "advance fee" prior to negotiating the terms of a loan on the homeowner's behalf. Some loan modification companies are also inappropriately advising homeowners to cease making their mortgage payment(s) until the loan modification has been completed.
The Minnesota Homeownership Center offers loan modification services free of charge through their state-wide network of non-profit providers. The providers can also assist homeowners with foreclosure issues. A consumer looking to modify their current mortgage loan may contact the Minnesota Homeownership Center by calling 651-659-9336 or 1-866-462-6466. To check the license status of a loan modification company, contact the Minnesota Department of Commerce at www.commerce.state.mn.us or call 651-539-1700 or 1-800-657-3602.