ST. PAUL, MN – With reports this week that more than 14 million American homeowners are in foreclosure or delinquent on their mortgage payments, Commerce Commissioner Mike Rothman advised struggling Minnesota homeowners to use caution as they pursue modifications to their home loans. The Minnesota Department of Commerce took action this week against a loan modification company 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 Commissioner Rothman. “Time and time again we see vulnerable homeowners turn over their last dollar in hopes that their homes might be saved.”
But thanks to a consent order signed by Commissioner Rothman this week, 36 consumers – who were allegedly charged, on average, more than $2,000 in illegal advance fees by Mortgage Connection, Inc. of Bloomington – will get their money back within the next 30 days. It is a success story made possible by the diligent efforts of the Minnesota Department of Commerce’s Enforcement Division.
“We work hard every day to help ensure a fair and competitive marketplace, and to protect Minnesota consumers from wrongdoing,” said Rothman. “When consumers have been defrauded, we investigate those complaints and take appropriate actions to stop and remedy the misconduct.”
Minnesota resident Yasmine Ruiz Castillo is one of the 36 consumers who will receive a full refund from Mortgage Connection, Inc. She and her husband Javier paid the company more than $2,000 in up-front fees in hopes of saving their home from foreclosure. But their loan was never modified. Instead, the Castillos fell farther behind in their mortgage payments. In just a few months, they will lose their home to foreclosure.
“Unfortunately, what happened to Yasmine and Javier is not unique,” said Commissioner Rothman. “In far too many cases, consumers are promised help in modifying their loan, and persuaded into paying up-front fees – but many times they never see that money again. Instead, financially-strapped consumers fall farther behind on their mortgage payments, and fall deeper into debt and financial distress.”
In the case of Mortgage Connection, Inc., Enforcement Division investigators found sufficient evidence to allege that the company:
• Collected advance fees, in violation of MS 58.16
• Altered documents with white out prior to submitting them to lenders, in violation of MS 58.12
• Failed to have and maintain, at all times, a surety bond, in violation of MS 58.06, MS 58.12, and MS 58.08
• Failed to notify the Commissioner of any change in its surety bond within ten days, in violation of MS 58.06, MS 58.12, and MS 58.08
Based on these allegations, the Commerce Department has ordered that:
• Mortgage Connection, Inc.’s license has been revoked
• The company’s owner Augustus Odoom is hereby barred from residential mortgage origination and mortgage servicing in the State of Minnesota
• Mortgage Connection, Inc. shall pay a civil penalty of $40,000 – which is stayed based on compliance with:
o Within 30 days, returning all advance fees to its customers who did not receive a loan modification
o Within 45 days, providing the Department a report detailing which customers qualified for a refund, the amount each customer was refunded and when
o Informing customers that the company is no longer in the business of modifying loans
In light of these charges, and actions taken against a number of other loan modification companies in recent months, Commissioner Rothman encourages Minnesota consumers to take precautions. For people who are having trouble making their mortgage payments, here are some helpful tips and guidelines to follow:
• First, contact your mortgage company to try and work out a loan modification
• Contact the Minnesota Homeownership Center for free loan modification assistance
• Beware of anyone charging up-front fees; NEVER pay advance fees to loan modification companies
• Contact the Minnesota Department of Commerce Consumer Protection Line 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 be reached by email at consumer.protection@state.mn.us or by phone at (651) 296-2488 or (800) 657-3602 in Greater Minnesota.
