FTC bans mortgage modification companies from taking up-front fees

The Federal Trade Commission has adopted a new rule the companies offering to help homeowners avoid foreclosure may not collect any up-front fees until the homeowner gets a written offer from the lender that the homeowner considers acceptable.

This rule is intended to diminish any further fraud by mortgage modification companies. The rule prevents a company from collecting any fee from a consumer until the lender or loan servicer has made an offer that the consumer deems acceptable, according to the Florida Bar News. Consumers are able to reject the offer without any charge due to the loan modification company.

However when working with attorneys, according to the new rule, they are exempt from the new rule if they meet the following conditions.

1) They are engaged in the practice of law.

2) They are licensed in the state where the consumer or dwelling is located.

3) They comply with state laws and regulations governing attorney conduct.

4) They must place any fees they collect in a client trust account and abide by state laws and regulations covering such accounts.

The new rule becomes effective December 29, except for the advance fee prohibition which will be in effect January 31, 2011.

If you need proper assistance with you mortgage modification and need a Tampa loan modification attorney, please contact us today for immediate assistance at 813-931-0840.

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About Blick Law

Public Relations Specialist
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