FTC issues rule to protect struggling homeowners.
Soon homeowners will be protected by a new Federal Trade Commission rule which bans companies that provide mortgage foreclosure rescue and loan modification services from getting fees until the homeowner has a valid offer from their mortgage company that they decide is acceptable to them.
“At a time when many Americans are struggling to pay their mortgages, peddlers of so-called mortgage relief services have taken hundreds of millions of dollars from homeowners without ever delivering results, FTC Chairman John Leibowitz said. By banning providers of these services from collecting fees until the customer is satisfied with the results, this rule will protect consumers from being victimized by these scams.”
The FTC is issued this rule to protect homeowners from mortgage relief and modifications scams. Many of these companies are bogus, and falsely claim that they can negotiate mortgage relief or get a loan modification, or do a short sale. In fact, many of these bogus operators claim to be associated with the government. The FTC has sued more than 30 of these outfits recently and state and federal law-enforcement agencies have sued even more.
Attorneys are exempt from the rule provided that they are engaged in the practice of law and properly licensed in the state where the consumer homeowner is located. Also, attorneys must comply with state laws and regulations which govern their conduct and further, the fees must be placed in their trust accounts and all state law regulations applicable to trust accounts must be followed.
The rule becomes effective December 29, 2010.