Mortgages & Foreclosure

To help people who are having difficulty with their mortgage payments, we have prepared a "Mortgage Fact Sheet" with information on some potential avenues of relief. For information on mortgage foreclosure and steps you can take if you have fallen behind on your payments see our flyer entitled "Facing Mortgage Foreclosure."

Mortgage Modifications

Mortgage modifications take many forms—interest rate reductions, extending the length of time it takes to pay off the mortgage, adding part of the amount owed to the end of the mortgage, adding all delinquencies to the back-end of the loan, and, in some cases, principal reduction. The following are some of the programs that may be available to people seeking a mortgage modification:

• Home Affordable Modification Program. The Home Affordable Modification Program (HAMP) is a federal program that provides incentives to lenders and servicers to modify mortgages. The federal government announced that HAMP will be available through the end of 2015. More information on this program is available here.
• Home Affordable Unemployment Program. The Home Affordable Unemployment Program (UP) is a federal program that allows eligible unemployed borrowers to make a partial payment, not to exceed 31 percent of their gross monthly income, during the UP forbearance period. Click here for more information on this program.
• Other Options. Many mortgage servicers offer in-house modifications. The eligibility guidelines and applications processes vary by servicer, so borrowers should contact their mortgage servicer directly to determine any available options. In addition, Fannie Mae and Freddie Mac began to offer their own modifications in 2012 for borrowers who are not eligible for HAMP.

There are many mortgage modification scams in the marketplace (more on this below). You do not have to pay a fee for assistance with a modification. For more information on mortgage modifications see our flyer entitled "Mortgage Fact Sheet"

Refinancing Your Mortgage

If you are considering refinancing your mortgage, you should contact your lender directly to see if it will refinance your loan. In addition, you may qualify for one of the modification options described above. You may also try refinancing through another lender or contact a U.S. Department of Housing and Urban Development approved nonprofit housing counselor for additional assistance. Be very careful about who you select to assist you, as there are many refinancing scams in the marketplace (more on this below).

Short Sales

A short sale occurs when a lender allows a homeowner to sell their home for less than the principal balance of the mortgage. With short sales, the lender may still hold the seller responsible for the deficiency. And if the seller has a second mortgage, he or she may be responsible to the owner of the second mortgage for any deficiency as well. People interested in a short sale should contact their lender about the application and qualification process. Because short sales can have income tax consequences, they may also want to consult with a tax advisor.

Mortgage Foreclosure

Foreclosure is the process by which a lender that is servicing a mortgage loan repossesses the property and forces the borrower out of the home because the borrower failed to meet the terms of the loan or has defaulted on the payments. The foreclosure process takes place in several stages, including default, sheriff’s sale, and redemption period. If you have fallen behind on your payments, contact your lender as soon as possible and ask about your options. Because each person’s financial situation is different, there may be a range of solutions available to you. For more information on this topic and your rights when facing foreclosure, see our flyer entitled "Facing Mortgage Foreclosure."

Mortgage Assistance Scams

Mortgage assistance scam artists charge people up-front fees and fail to deliver on promises to modify a borrower’s loan terms or save a home from foreclosure. No homeowner should pay up-front free for mortgage assistance because there are nonprofit organizations that provide such services for free. Below is a list of some scams:

• Foreclosure Consultant Scams. Foreclosure consultant companies purport to help people save homes that are in foreclosure. Foreclosure consultant scam artists charge large, up-front fees for services such as financial advice, negotiating payments or other solutions with a lender, or exploring the sale of the property. In some cases, foreclosure consultant scam artists who collect up-front fees do not actually provide any of the promised services and disappear overnight. Under Minnesota law, foreclosure consultants are prohibited from collecting any fees until after they have provided the contracted services.
• Mortgage Modification Scams. Mortgage modification companies purport to help people modify the interest rate or other terms of their mortgages. Mortgage modification scam artists charge large, up-front fees and often fail to deliver on the promised services. Under Minnesota law, mortgage modification companies cannot accept any fee until it has provided the contracted services.
• Forensic Loan Auditors. Forensic loan auditors purport to help homeowners discover violations of state and federal mortgage lending laws in the homeowner’s mortgage loan. These companies claim that these violations will provide the homeowner with “ammunition” to use against the lender to obtain a faster or more favorable mortgage modification or foreclosure relief. Forensic loan auditor scam artists charge hefty up-front fees for their services when there is no evidence to support their claims, and often fail to deliver any relief.
• Refinancing Scams. These scams typically begin when a homeowner receives an unexpected call or mailing offering to refinance their mortgage loan because of their good payment record, credit, or something of the like. After the scam artist convinces the homeowner to refinance, the homeowner is asked to pay a fee to proceed. If the homeowner pays the fee, nothing happens on the homeowner’s file and he or she is out thousands of dollars.

If you have a question or experience a problem related to a mortgage or foreclosure, or have been targeted by a mortgage or foreclosure-related scam, we want to hear from you. Complaints from members of the public help us to identify potential violations of Minnesota law and new problems occurring in the marketplace. In addition, we can sometimes help people solve problems they are having with their mortgage or lender. If you would like to file a complaint with this Office, please submit a completed Consumer Assistance Request Form to:

Office of Minnesota Attorney General Keith Ellison
445 Minnesota Street, Suite 1400
St. Paul, MN 55101

Additional Resources

The Minnesota Attorney General’s Office offers the following materials, which are designed to provide information to Minnesotans on issued related to mortgages and foreclosure:

Mortgage Fact Sheet
Home Buyer’s Handbook
Mortgage Assistance Scams
Refinancing Scams
Home Seller’s Handbook
Mortgage Foreclosure
Reverse Mortgages

If you need help with a mortgage or foreclosure related problem, the following agencies and organizations may be able to provide information, referrals, and assistance:

If you experience a problem with a bank or mortgage company, you should contact the following government agencies, as applicable:

Minnesota Department of Commerce

The Minnesota Department of Commerce is the State agency with the authority to license and regulate mortgage brokers and other professionals and companies in the real estate and mortgage industries. For more information or to file a complaint, contact the Department of Commerce as follows:

Minnesota Department of Commerce
85 7th Place East, Suite 280
St. Paul, MN 55101
(651) 539-1500 (local)
(800) 657-3602 (Greater MN only)
www.mn.gov/commerce

The Office of the Comptroller of the Currency

The Office of the Comptroller of the Currency is the federal agency with authority to license and regulate national banks. For more information or to file a complaint against a national bank, contact the Office of the Comptroller of the Currency as follows:

Office of the Comptroller of the Currency
Customer Assistance Group
1301 McKinney Street, Suite 3450
Houston, TX 77010
(800) 613-6743
www.occ.gov

Federal Trade Commission

The Federal Trade Commission (FTC) is the federal agency that has authority to take action against deceptive, fraudulent and unfair business practices in the marketplace. For more information or to file a complaint, contact the FTC as follows:

Federal Trade Commission
Bureau of Consumer Protection
600 Pennsylvania Avenue NW
Washington, DC 20580
(877) 382-4357
TTY: (866) 653-4261
www.consumer.ftc.gov

The Federal Deposit Insurance Corporation

The Federal Deposit Insurance Corporation (FDIC) is a federal agency with the authority to regulate banks that do not join the federal reserve system. For more information or to file a complaint about a state-chartered bank that is not a member of the federal reserve system, contact the FDIC as follows:

Federal Deposit Insurance Corporation
Consumer Response Center
1100 Walnut Street Box #11
Kansas City, MO 64106
(877) 275-3342
www.fdic.gov

Board of Governors of the Federal Reserve System

The Federal Reserve Board of Governors is a federal agency with the authority to regulate state-chartered banks that are members of the Federal Reserve System. For more information or to file a complaint against a state-chartered bank that is a member of the Federal Reserve System, contact the Board of Governors as follows:

Federal Reserve Board of Governors
Federal Reserve Consumer Help
P.O. Box 1200
Minneapolis, MN 55480
(888) 851-1920
www.federalreserveconsumerhelp.gov

National Credit Union Administration

The National Credit Union Administration is the federal agency with authority to license and regulate credit unions. For more information or to file a complaint about a credit union, contact the National Credit Union Administration as follows:

National Credit Union Administration
1775 Duke Street
Alexandria, VA 22314
(800) 755-1030
www.ncua.gov

Consumer Financial Protection Bureau

The Consumer Financial Protection Bureau is a federal agency that has authority to enforce various federal regulations and laws and to advocate on behalf of consumers as it relates to problems with banks, mortgages, credit cards, and financial institutions. For more information or to file a complaint, contact the Consumer Financial Protection Bureau as follows:

Consumer Financial Protection Bureau
P.O. Box 4503
Iowa City, IA 52244
(855) 411-2372
www.consumerfinance.gov