FTC Seeks to Regulate Mortgage Assistance Relief Services

This story appeared in Bank Digest.

The Federal Trade Commission has issued a notice of proposed rulemaking concerning the practices of 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 avoid foreclosure on those loans. The proposed rule would, among other things: prohibit providers of these services from making false or misleading claims; mandate that providers disclose certain information about these services; bar the collection of advance fees for these services; prohibit persons from providing substantial assistance or support to an entity they know or consciously avoid knowing is engaged in a violation of the regulations; and impose recordkeeping and compliance requirements. The FTC is taking this action pursuant to the 2009 Omnibus Appropriations Act, which was later clarified by the Credit Card Accountability and Responsibility and Disclosure Act of 2009.