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02/18/10

FTC Proposes Regulation to Address Loan Modification Scamming

The Federal Trade Commission proposed a new rule to protect distressed homeowners from loan modification scammers. The new rule would ban for-profit loan modification service providers from charging up-front fees to homeowners. If this rule is implemented, companies would only receive payment once the services they promised are delivered.

In addition to banning upfront fees, the proposed FTC rule requires a higher level of transparency from for-profit loan modification service providers.  The rule would bar deceptive and misleading practices, such as telling homeowners not to communicate with their lenders, not being upfront about the likelihood of getting results, appearing to be affiliated with a government program, and not being honest about refund and cancellation policies.

This rule would provide crucial support needed by the current federal, state and local enforcement efforts to fight unscrupulous and misleading loan modification scammers. As stated by FTC Chairman Jon Leibowitz, "Homeowners facing foreclosure or struggling to make mortgage payments shouldn't have to contend with fraudulent ‘companies' that don't provide what they promise." Please join the Loan Modification Prevention Network in urging the FTC to implement this important rule.

Please join us in supporting this new rule by sending a message to the FTC

For more information, read the Federal Trade Commission's press release "FTC Proposes Rule That Would Bar Mortgage Relief Companies From Charging Up-Front Fees"