FTC Wants Tougher Repossession Houses Rescue Rules
The U.S. Federal Trade Commission (FTC) wants to have a hand on regulating companies that offer repossession houses rescue and loan modification services. The agency has started drafting tougher rules as more and more companies emerge to offer foreclosure prevention and loan modification services.
The agency’s desire to regulate the foreclosure prevention industry comes at a time when an increasing number of distressed homeowners have fallen victims to con artists who pretended to help them negotiate their loans with lenders to avoid repossession houses.
FTC Chairman Jon Leibowitz said that distressed homeowners who are in danger of losing their properties to foreclosures or struggling to pay their monthly mortgages should not have the added problem of being defrauded by unscrupulous people who promised them help that never materialized.
Leibowitz praised the efforts of Senator Byron Dorgan and Chairman Jay Rockefeller to give the agency the authority to develop standard and efficient rules to start regulating the foreclosure prevention process.
Meanwhile, the Mortgage Assistance Relief Services is studying the growth of the foreclosure prevention and loan modification services in the country. The FTC is seeking public comment to help it determine whether rules will be useful in protecting distressed homeowners from fraudulent foreclosure prevention services.
On the other hand, the FTC also wants to receive comments on the benefits and costs of restricting or prohibiting the payment of upfront fees for repossession house rescue and loan modification services. The public has until July 15, 2009 to submit their comments about the issue to the FTC.
Furthermore, the FTC also wants the public to comment on the Mortgage Acts and Practices law which deals with mortgage loan-related activities, including origination, marketing and advertising, loan terms, underwriting, appraisals, disclosures and servicing. Deadline for public comment for this issue is set on July 30.
Meanwhile, in California, Attorney General Jerry Brown has issued a policy requiring foreclosure prevention consultants to register with the state and post a bond of $100,000 on or before July 1.
Under Brown’s directive, failure to comply is a state law violation which is subject to fines of as much as $25,000 per violation and criminal penalties of a maximum of one year in prison.
Brown explained that by mandating that foreclosure prevention consultants submit pertinent information to his office and post a bond, he hoped to give transparency to the business and protect distressed homeowners from repossession houses fraud.
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