Home owners who fall behind on their mortgages will most likely be approached by people offering to help them save there homes from foreclosure by a loan modification program. In the past, these people didn’t have to be licensed by the state of Utah, they could just get a Notice of Default list from the recorders office and start contacting homeowners. a lot of home owners would get swindled out of their money and some got swindled out of their homes!

This year the Utah State Legislature requires anyone offering to help with a Loan Modification or Foreclosure Rescue Service be a Mortgage Licensee or hold a Utah Real Estate license. You can find the names of licensed Mortgage and Real Estate people at the Department of Commerce website.

The following are NOT allowed:

• Request or require a person to pay a fee before executing a written agreement defining the services you will provide.
• Require a person to forfeit the fee if the lender forecloses on the property within one year from the date on which you and your client execute the written agreement for services.
• Suggest to a person that you have a spe­cial relationship with his or her lender or loan servicer.
• Falsely represent or advertise that you are acting on behalf of a government agency, a lender or loan servicer, or a nonprofit or charitable institution.
• Recommend or participate in a foreclosure rescue that requires a person to transfer title to you or to a third party with whom you have a business relationship or finan­cial interest.
• Advise a person to make a mortgage pay­ment to anyone other than his or her loan servicer.
• Tell a person to refrain from contacting his or her lender, loan servicer, attorney, credit counselor, or housing counselor.
• Effective May 11, 2010, engage in fore­closure rescue or loan modification without offering in writing to the client a right to cancel the agreement within three business days after the day on which he or she enters the agreement.

Source: Utah Division of Real Estate First Quarter, 2010

If you’ve tried to buy a foreclosed home within the last 6 months, you found that if you were using an FHA loan, you were unable to get financing because of the requirement that limited FHA from insuring homes owned less than 90 days by the current owner. Most of the affordable homes were purchase by investors and then placed back on the  market in less than 90 days. Home buyers were unable to purchase these home because of the 90 day seasoning requirements.

To fix this problem, HUD Secretary Shaun Donovan said:

“As a result of the tightened credit market, FHA-insured mortgage financing is often the only means of financing available to potential homebuyers,” said Donovan. “FHA has an unprecedented opportunity to fulfill its mission by helping many homebuyers find affordable housing while contributing to neighborhood stabilization.”

This change in policy is only temporary and will expire one year from the starting date of February 1, 2010. There are also some restrictions. To read more about this click here.