FTC Rules to Help Homeowners Spot Mortgage Relief Scams

FTC Rules to Help Homeowners Spot Mortgage Relief Scams

FTC Rules to Help Homeowners Spot Mortgage Relief Scams

A new Federal Trade Commission rule was put in to place recently to help protect homeowners who are facing foreclosure. The FTC has decided that mortgage foreclosure rescue or relief operations and loan modification services cannot collect fees for their services until the homeowners receives an offer from their lender that they find acceptable. This will help prevent desperate homeowners from becoming further indebted to mortgage relief scams.

The chairman of the FTC, Jon Leibowitz, says that these services have charged millions of dollars in fees to consumers who did not receive satisfactory results. The ruling is known as the Mortgage Assistance Relief Services Rule. Many mortgage relief services are scams that claim that they will negotiate for the consumer with the mortgage lender to assure a short sale, loan modification for lower monthly payments, or something similar. But often enough these services are run by opportunistic con artists who have no abilities to negotiate with mortgage companies, and they collect the high service fees regardless of outcome.

Hundreds of cases against these groups have been brought to court over operations claiming to be affiliated with housing or other government programs. Under the new rule, no mortgage relief company can collect advanced fees before a written offer is accepted by the consumer. If the consumer rejects the offers, no fee is owed to the company. Companies must also disclose important information to their customers, including their lack of association with any government programs, the fact that the lender is not guaranteed to modify the loan, and that following advice given by company employees may lead to serious consequences.

Consumers have the right to stop doing business with any mortgage relief company at any time in the process without penalties under this new rule. They must also be informed of the company’s actual rate of success, without any inflated or misleading claims.


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