Foreclosure “rescue” services will have to really put their money where their mouths are, thanks to new rulings by the Federal Trade Commission (FTC). Previously, it was simply a “red flag” to buyers if a rescue service required upfront payment, but now foreclosure rescue and loan modification services must wait to collect fees until the homeowner in question has an acceptable written offer in hand from their lender or servicer. “By banning providers of these servicers from collecting fees until the customer is satisfied with the results, this rule will protect consumers from being victimized by these scams,” said FTC chairman Jon Leibowitz.
Companies must clearly state that they are not affiliated with the government, nor are they approved by the government or, necessarily, the consumer’s lender. Clearer explanations of the potential consequences of ceasing to pay a mortgage – credit damage and foreclosure – are also required. Furthermore, consumers must be allowed to stop doing business with the company in question at any time and can reject any offer and refuse to pay the company’s fees, even if a reduction or other modification is accomplished. If the change is not deemed “acceptable” by the consumer, then the consumer does not have to pay.
It should be noted that attorneys are “generally exempt” from these new rules.
Do you think that these changes are a good thing?
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