Mortgage Relief Scams

Consumer Finance

Mortgage Relief Scams and Mortgage Advertising and Servicing

Mortgage relief scammers falsely claim that, for a fee (typically hundreds or thousands of dollars paid up-front), they will negotiate with consumers’ mortgage lenders or servicers to obtain a loan modification or other relief to avoid delinquency or foreclosure. Many of them pretend to be affiliated with the government or government housing assistance programs. Some falsely claim to be offering legal services or “audits” of consumers’ loan paperwork to help them negotiate a resolution with their lenders. Unfortunately, these operations often fail to obtain the relief they promise, and they sometimes fail to take even minimal steps to help consumers.

Over the past few years, the FTC has filed over 35 cases against marketers of mortgage relief services, and the agency has partnered with state law enforcers to bring hundreds more. Additionally, in 2010, the FTC issued the Mortgage Assistance Relief Services (or “MARS”) Rule – which bans mortgage relief providers from collecting fees until they have obtained a loan modification or other relief for a consumer. The Rule also prohibits providers from misrepresenting material aspects of their services and requires that they disclose key information to consumers.

Mortgage advertising and servicing

The FTC also works to protect consumers from illegal practices in the mortgage lending industry, with emphasis on the subprime market. Our cases have targeted deceptive and unfair practices by entities who work with consumers throughout the mortgage cycle – including advertisers, lenders, and loan servicers. In 2011, the FTC also issued the Mortgage Acts and Practices (or “MAP”) Rule – which bans advertisers from misrepresenting mortgage terms.

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