FTC Bans Up-front Fees for Mortgage Modification

[The Straight Story]

FTC Bans Up-front Fees for Mortgage Modification

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

"Homeowners facing foreclosure or struggling to make mortgage payments shouldn't have to contend with fraudulent 'companies' that don't provide what they promise," FTC Chairman Jon Leibowitz said. "The proposed rule would outlaw up-front fees so companies can't take the money and run."

The FTC said the mortgage crisis has launched an industry of companies purporting, for a fee, to obtain mortgage loan modifications or other relief for consumers facing foreclosure. The FTC has brought 28 cases in this area, and state and federal law enforcement partners have brought hundreds more. Generally these cases charged that companies do not provide the services they promise and that they misrepresent their affiliation with the government and government housing assistance programs.

The commission accused two California-based companies of collecting at least $3.3 million from Spanish-speaking homeowners without following through on promises to help them negotiate loan modifications with lenders to avoid foreclosure.

http://www.upi.com/Real-Estate/2010/02/04/FTC-Bans-Up-front-Fees-for-Mortgage-Modification/6091265322350/