March 21, 2023

St. Paul, Minn. (June 29, 2010) – At a community event today in St. Paul’s Payne-Phalen neighborhood, the Minnesota Home Ownership Center launched a new public education and outreach campaign. “Look Before You Leap” is designed to help homeowners identify and avoid loan modification scams in an effort to curb the state’s unprecedented foreclosure rate.

The campaign is supported by more than 50 business, nonprofit and local government partners across Minnesota.

Over the next six months, “Look Before You Leap” will focus outreach efforts in the Minnesota communities where mortgage scams and foreclosures continue to mount: in exurban communities; communities with high unemployment rates; among seniors; and within the Latino, Hmong and African American communities. As one of the communities hardest hit by the foreclosure crisis, the campaign chose the Payne-Phalen neighborhood as its kick-off point.

“Foreclosure prevention scams have boomed in the past year, in particular, as federal loan modification rules came into place,” said Julie Gugin, executive director of the Minnesota HomeOwnership Center. “These scams cost Minnesotans their homes, their savings or often both. ‘Look Before You Leap’ is bringing together Minnesota business, nonprofit and local government partners to shine a spotlight on these terrible scams and to ensure that the counseling resources this campaign will offer get to those who need it most.”

“Look Before You Leap” will call attention to schemes employed by some loan modification companies. Resources will help potential homeowners identify practices by unethical companies that include the following:

Charge fees for their services;

• Ask homeowners to sign over title to a home or even power of attorney as part of their work;

• Claim that homeowners should stop paying on a mortgage during the loan modification process;

• Claim that a homeowner should pay the company, rather than the mortgage holder, during the modification process; or

• Promise a guaranteed outcome.

The Minnesota campaign is part of a national initiative called the “Loan Modification Scam Alert,” which aims to end loan modification scams across the country. NeighborWorks America, coordinator of this national campaign, will support the “Look Before You Leap” campaign.

“The number of loan modification scams reported to the Federal Trade Commission jumped from only one in 2008 to nearly 8,000 last year, and that number continues to swell. This campaign is helping homeowners spot these dangerous companies so they don’t fall prey to the costly scams and gimmicks,” added Steve Hermes of NeighborWorks America.

“Many loan modification scam companies can appear legitimate to even the most skeptical untrained eye,” explained Gugin. “Look at the National Loan Modification Association of America, for example. The company claims to be a ‘Better Business Bureau-like’ clearinghouse for loan modification companies, but actually just promotes other scamming for-profit modification companies that it owns. To the average consumer, it looks like they are working with an accredited and legitimate organization but the reality is it’s just another deceptive scam. That’s how these companies work to take homeowners’ money, leaving them with even fewer options to protect their home from foreclosure.”

Homeowners seeking assistance with a loan modification or foreclosure are encouraged to contact the Minnesota Home Ownership Center’s statewide network of nonprofit counselors as an alternative to the scamming companies. These counselors are trained to negotiate with lenders on behalf of homeowners. Homeowners can connect with a nonprofit counselor in their area or by calling 866-462-6466.

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