Foreclosure accountability

A bill that could help prevent desperate homeowners from being taken advantage of by consultants who offer help to avoid foreclosure but don’t follow through awaits conference committee action.

“What we’re doing is closing some loopholes in the statute,” said Rep. Joe Mullery (DFL-Mpls), who sponsors HF903/SF708* with Sen. Lisa Fobbe (DFL-Zimmerman). “It gets at a lot of the problems with people who say they’re going to help people with mortgage problems” but instead take payment without providing the services they promise.

The Senate, which passed the bill 60-4 March 30, refused to concur with amended House bill, passed 131-1 May 4.

The bill would modify a 2004 law regulating mortgage foreclosure consultant contracts by clarifying that people classified as mortgage consultants, including originators of mortgages who negotiate or renegotiate a mortgage and nonprofit agency counselors who work with people at risk of foreclosure, may collect a fee only after the services have been performed.

As amended by the House, the bill would allow an owner of homestead real estate consisting of one to four residential units to postpone a mortgage foreclosure sale for five months. That provision would give the homeowner more time to reinstate the mortgage loan by paying off the amount in default plus associated costs, rather than the entire amount mortgage loan after the foreclosure sale.