Wednesday, February 10, 2010

FTC Proposes Rule Banning Upfront Fees For Loan Mods; Applies Nationwide, Limited Exemption For Attorneys In Consumer Bankruptcy, Other Proceedings

The Federal Trade Commission announced:

  • The Federal Trade Commission moved to protect distressed homeowners from the promoters of bogus foreclosure rescue and mortgage modification services by proposing a new rule that would forbid companies to charge up-front for these services. Instead, companies could only collect payment after providing services.


  • The proposed rules would apply to for-profit companies that, in exchange for a fee, offer to work with lenders and servicers on behalf of consumers to modify the terms of mortgage loans or to take other steps to avoid foreclosure on those loans. The proposed rules generally exempt entities that own or service mortgage loans. Attorneys would have a limited exemption from the proposed advance fee ban if they represent consumers in a bankruptcy or other legal proceeding.

For the entire press release, see FTC Proposes Rule That Would Bar Mortgage Relief Companies From Charging Up-Front Fees.

For the text of the Federal Register Notice, see Notice of Proposed Rulemaking: Mortgage Assistance Relief Services.

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