Those teetering on the edge of foreclosure may welcome outside help to renegotiate their mortgage, but those promising foreclosure assistance don’t always follow through. Homeowners will have more protection against unscrupulous consultants.
A new law modifies a 2004 law regulating mortgage foreclosure consultant contracts. It clarifies 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 for such services only after the services have been performed.
The law, sponsored by Rep. Joe Mullery (DFL-Mpls) and Sen. Lisa Fobbe (DFL-Zimmerman), takes effect June 20, 2009.
The law also will 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 will give a homeowner more time to reinstate the mortgage loan by paying off the amount in default plus associated costs, rather than the entire mortgage amount loan after the foreclosure sale.
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