Industry NewsMortgage

Feds to restrict foreclosure rescue firms

FTC proposes ban on advance fees for help with loan mods

Learn the New Luxury Playbook at Luxury Connect | October 18-19 at the Beverly Hills Hotel

Federal regulators say they intend to follow the lead of many states in banning for-profit companies from collecting advance fees from homeowners in exchange for promises to help them obtain loan modifications or avoid foreclosure.A rule proposed today by the Federal Trade Commission would bar for-profit companies that work with lenders and servicers on behalf of homeowners to modify loans or avoid foreclosure from collecting payment until after such services are provided, and impose other restrictions on their practices.The FTC said that in many cases, companies collecting advance fees told homeowners to stop communicating with their loan servicer and did not provide the services they promised. Some have falsely claimed to be affiliated with government programs, including the Making Home Affordable Program, the FTC said.Foreclosure rescue companies have also misled consumers about their refund and cancellation policies, and the likelihood of obtaining a loan modification, the FTC said...