Consumers invited to comment of FTC rulemaking on Deceptive Mortgages

Last week the Federal Trade Commission reported that it is seeking public comment to determine whether certain practices by companies providing foreclosure rescue and loan modification services are unfair or deceptive and should be reined in by proposed rules that would set standards to protect consumers.

“Homeowners who are facing foreclosure or struggling to make mortgage payments shouldn’t have the added burden of being misled by unscrupulous businesses promising assistance that never comes,” FTC Chairman Jon Leibowitz said. “We deeply appreciate Senator Byron Dorgan’s and Chairman Jay Rockefeller’s efforts to give us the authority to use standard, efficient rulemaking procedures to begin this process.”

Thus, the FTC launched the Mortgage Assistance Relief Services rulemaking that addresses the proliferation of loan modification and foreclosure rescue services in the current economy. As the Commission says that it will bring law enforcement actions against those who make deceptive claims about these services to consumers in financial distress. Public comment will allow the Commission to assess whether rules would be useful in protecting consumers of these services.

The official statement says that the FTC is particularly interested in receiving comment on the costs and benefits of prohibiting or restricting the payment of advance fees for loan modification and foreclosure rescue services. The Mortgage Assistance Relief Services Advance Notice of Proposed Rulemaking has a 45-day public comment period ending Wednesday, July 15, 2009.

Besides, the FTC said that it is seeking comment on a second rulemaking, the Mortgage Acts and Practices rulemaking, which addresses activities that occur throughout the life-cycle of a mortgage loan: advertising and marketing; origination, including underwriting, loan terms, and disclosures; appraisals; and servicing. Public comment will allow the Commission to assess whether rules regarding any of these activities would be useful in protecting consumers. The FTC is particularly interested in receiving comments about mortgage servicing. The Mortgage Acts and Practices Advance Notice of Proposed Rulemaking has a 60-day public comment period ending Thursday, July 30, 2009.