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Are New Minnesota Loan Modification Rules on the Horizon?


Posted on Jun 03, 2012

In recent years, some Minnesota homeowners have been victims and lost money to people who promised to help them with their debt problems through loan modifications. Homeowners were told that for a fee of $750, Trinity Mortgage would help them refinance their homes or modify their home loans. However, Trinity Mortgage didn’t do that, and instead cashed the checks of people who thought they were seeking loan modifications. Kevin Sistrunk, who worked for Trinity Mortgage, was charged with check forgery and theft and pleaded guilty on both counts.

 

Trinity Mortgage was not the only case of a company promising loan modifications and not delivering. Save My Home USA has allegedly defrauded more than 100 Minnesota families by charging upfront fees for loan modifications that are said not to have occurred.

 

In response to these cases and others, the Minnesota legislature is now trying to pass legislation that would prevent people struggling with debt from suffering similar fates in the future. Currently in Minnesota, loan originators are required not to charge a client for compensation until they do what they told the client they would do. Yet, compensation is loosely defined, giving loan originators ways to charge upfront fees, and homeowners are currently not allowed to sue for damages.

 

The new legislation has unanimously passed the Minnesota Senate and no objections have been raised in the House. The proposed law would close loopholes that still exist for some loan originators who offer loan modifications. For example, loan originators will be required to provide paperwork to clients or give specific warnings before a homeowner signs any documents.

 

Our Minnesota loan modification lawyers hope that anyone who was hurt by a loan modification scam is able to recover quickly.

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