FEDERAL TRADE COMMISSION TO BAN LOAN MODIFICATION COMPANIES AND UPFRONT FEES
FEDERAL TRADE COMMISSION TO BAN LOAN MODIFICATION COMPANIES AND UPFRONT FEES
Announced on November 19, 2010 by Joe Biden as part of the Obama's administration's plan to help the struggling middle class consumer, the Federal Trade Commission would soon begin banning companies from charging upfront fees to consumers who are looking for help with their home mortgages. The new rule by the FTC cannot be collected until homeowners receive a written offer from the lender and they accept the offer.
To help prevent consumers from being scammed by companies promising to modify their home mortgages, the FTC will ban companies stating they are affiliated with the government and cannot say they will promise a successful loan modification to be offered by their lender. As an added incentive the companies must also disclose to consumers if they stop paying their mortgages it could damage their credit score and also put them in a position to lose their home to foreclosure. This rule will also ban these mortgage relief companies from telling homeowners to stop talking to their lenders and must have evidence backing up their claims about their effectiveness of their services.
According to Jon Leibowitz FTC Chairman he stated, "This rule will protect consumers from being victimized by loan modification scams."
The Obama administration is also looking at other measures to also include a project by the Department of Labor and the American Bar Association to start assisting workers involved in loss wage complaints and strengthen mediation foreclosure programs to help homeowners avoid foreclosure. As Joseph Biden pointed out, we are in difficult economic times and we want to make sure we are doing everything we can for all Americans.
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