Help For Struggling Homeowners From Scammers

November 20 2010 (Jeff Alan)
mortgage-relief-lifejacket
One of the worst things that happens during tough economic times is that the scammers always seem to come out of the wood work. Well now there’s good news for struggling homeowners.

The Federal Trade Commission (FTC) has announced the Mortgage Assistance Relief Services (MARS) Rule which bans providers of mortgage foreclosure and loan modification services from collecting fees until homeowners have a written offer from their lender of servicer that they decide is acceptable.

FTC Chairman Jon Leibowitz said, “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 hundreds of thousands of homeowners without ever delivering results. 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 most significant consumer protection under the FTC’s new rule is the advance fee ban. Mortgage relief companies can no longer collect any fees until they provide a written offer from the homeowner’s mortgage lender or servicer that must include a description of the key changes to their mortgage and the result if the homeowner accepts the offer. The mortgage relief companies must also inform you of your right to reject the offer without any charge.

Mortgage relief companies must also explain in their communications to the homeowners that they can stop doing business with the company at any time, can accept or reject any offer that the company obtains from the lender or servicer, and, if they reject the offer, they don’t have to pay the company’s fee. The companies also must disclose the amount of the fee.

In addition, the rule bars mortgage relief companies from telling consumers to stop communicating with their lenders or servicers. Companies also must have reliable evidence to back up any claims they make about the benefits, performance, or effectiveness of the services they provide.

But buyer beware…it doesn’t mean that this will be the end of unscrupulous companies. Most of the scammers prey on homeowner ignorance, just like we’ve seen in so many other industries.

The new MARS rule also has a slightly different set of provisions if you decide to use an attorney. Attorneys are generally exempt from the rule if they meet three conditions:

– They are engaged in the practice of law;

– They are licensed in the state where the consumer or the dwelling is located; and

– They are complying with state laws and regulations governing attorney conduct related to the rule.

To be exempt from the advance fee ban, attorneys must meet a fourth requirement—they must place any fees they collect in a client trust account and abide by state laws and regulations covering such accounts. All provisions of the rule except the advance fee ban will become effective Dec. 29, 2010. The advance-fee ban provisions will become effective Jan. 31, 2011.

Tags: MARS, scammers, mortgage assistance relief, mortgage, foreclosure, mortgage foreclosure, homeowners, mortgage lenders, mortgage relief, advance fees