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Loan modifications require mortgage broker license

By John Rebchook, Rocky Mountain News (Contact)

Published November 20, 2008 at 12:05 a.m.

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Only licensed mortgage brokers may provide home loan modifications in Colorado under the new Mortgage Broker Licensing Law, the Colorado Division of Real Estate reminded consumers on Wednesday.

The reminder came because of the increased number of complaints the division has received about loan modification companies.

"Any person offering to assist troubled borrowers by modifying the borrower's mortgage terms or conditions must be licensed as a mortgage broker in Colorado. Those operating without a license face steep fines and penalties for noncompliance," said Cary Whitaker, Mortgage Broker Program manager.

The real estate division intends to step up investigations into loan-modification companies as consumers continue to complain about high fees and low results.

These newly formed companies appear to have sprung up in response to the increased demand for solutions to the foreclosure crisis. "Borrowers need to be cautious before spending money on these services. Nonprofit HUD-approved housing counseling agencies are available to provide loan-modification assistance or foreclosure- prevention education, usually at no charge," said Erin Toll, director of the Colorado Division of Real Estate. Consumers can check the license status of mortgage professionals online at dora.state.co.us/real-estate or at 303-894-2166.