The new Mortgage Assistance Relief Services Rule is designed to put a stop to bogus operations that prey on distressed consumers who are looking for a way to keep their home, according to a Federal Trade Commission announcement. Under the new regulations, providers of foreclosure rescue and loan modification services can’t collect a fee until a homeowner has a written offer from a lender they deem acceptable.
“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,” FTC Chairman Jon Leibowitz said.
Leibowitz added the rule will protect consumers from being roped in by scams of this type, the report said. The MARS Rule’s most significant protection also states these companies can no longer falsely claim to negotiate with a mortgage lender or servicer to modify a loan, arrange a short sale or provide other foreclosure relief. Further, they must remind consumers they have the right to reject any offer from a third party without facing a charge.
Many consumers are facing foreclosure fear as a result of the robosigning epidemic that saw many banks approve the process without properly examining the appropriate documentation.
Facing foreclosure? Visit Credit.com’s Learning Center for information on Understanding Foreclosure and How to Save Your Home from Foreclosure.
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