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02/24/10

Consumer Complaints Soar on Mortgage 'Rescue' Schemes

On February 24, the Federal Trade Commission (FTC) released a report that documented a dramatic rise in the number of consumer complaints about companies advertising foreclosure rescue services, including loan modification consulting.  In 2009, victims of these scams submitted nearly 8,000 complaints to the FTC's Sentinel database, up from only one such complaint in 2008.  Complaint information has been invaluable for the FTC and other state and federal government agencies as they have sought to put a stop to the unscrupulous practices of the scammers.

While increased reporting is already helping the FTC fulfill its consumer protection mission by pursuing scammers, the agency is also seeking to use its rulemaking authority to outlaw the charging of upfront fees for loan modification services nationwide.  In states that have upfront fee bans, those laws have been central to the enforcement efforts of state attorneys general and bank regulators.  A nationwide upfront fee ban would provide the FTC with a valuable tool for the protection of distressed homeowners in states without similar laws and without active state law enforcement involvement on the issue.

For more information, read the Huffington Post Investigative Fund article, "Consumer Complaints Soar on Mortgage ‘Rescue' Schemes."