WASHINGTON (CN) – The Federal Trade Commission has proposed a rule to prevent for-profit mortgage relief providers from collecting advance fees for their services, and other measures intended to protect homeowners facing financial crisis.
The rule would prevent the service providers from instructing consumers to stop communicating with their lender, require that they make reasonable estimates of how long it might take for a consumer to modify or prevent foreclosure on their mortgage, and require that they disclose their status as a for-profit service provider.
The FTC received authority to prevent unfairness or deception in loan modification and foreclosure rescue services under the Credit Card Accountability and Disclosure Act.
In addition to disclosure and payment restrictions, the FTC would also require service providers to maintain a record of all contracts between the provider and the consumer, copies of all written communications between provider and consumer before a contract for services is signed, and transcripts of any recorded communications for 24 months after the contract is signed.
The public comment period on the proposed rule closes March 29.