Editorial - Some home loan modifications can sink you deeper in debt

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Struggling to pay your mortgage? You’re not alone.

A report last week stated that more than 14 million American homeowners are in foreclosure or delinquent on their mortgage payments.

But if you’re thinking about getting out of the jam by modifying your home loan, you should tread carefully and know exactly what you’re doing.

There are some businesses out there that will gladly take your money only to get you into a deeper financial mess.

Last week, the Minnesota Department of Commerce took action against a loan modification company in Bloomington that allegedly charged its customers illegal advance fees, altered documents, and operated in Minnesota without appropriate licensure.

“If it sounds too good to be true, chances are it probably is,” said Commerce Commissioner Mike Rothman. “Time and time again we see vulnerable homeowners turn over their last dollar in hopes that their homes might be saved.”

In light of the recent charges, and actions taken against a number of other loan modification companies in recent months, Rothman encourages Minnesota consumers to take precautions. The commerce department offers the following guidelines for people who are having trouble making their mortgage payments:

• First, contact your mortgage company to try and work out a loan modification.

• Contact the Minnesota Homeownership Center – www.hocmn.org/en/index.cfm – for free loan modification assistance or call the center at 1-866-462-6466.

• Beware of anyone charging up-front fees; NEVER pay advance fees to loan modification companies.

• Contact the Minnesota Department of Commerce Consumer Protection Line – http://mn.gov/commerce/Contact-Us/ or 1-800-657-3602 – to check on the license status or enforcement history of the loan modification organization you are working with.

• If you feel you might be the victim of a loan modification scam, contact the Minnesota Department of Commerce Consumer Protection Line to file a complaint and work with an investigator.

The Minnesota Department of Commerce Consumer Protection Line can also be reached by e-mail at consumer.protection@state.mn.us.

When people sink into financial trouble, they often wait until it’s too late to turn the problem around or they fall prey to a pitch that makes big promises that can’t be delivered. Avoid that trap. Deal with people you trust and don’t throw good money after bad.

Tags: opinion, editorials