Sci-fi fans will remember the 1996 movie "Mars Attacks!" where Americans banded together to fight off Martian invaders. (As it happens, the most effective tool against the enemy was a recording of Slim Whitman's "Indian Love Call.") Of course, if you want to keep things closer to home, you can follow the real-life adventures of the FTC, CFPB, 15 state AGs, and other law enforcement partners as they use the Mortgage Assistance Relief Services (MARS) Rule and other laws to battle a different species of invader – mortgage relief promoters who allegedly prey on consumers struggling to hold onto their homes.
Operation Mis-Modification is a federal-state sweep against companies that collected hefty upfront fees from homeowners based on bogus promises that they would help modify people’s mortgages or prevent foreclosure. The defendants used a variety of tactics challenged as illegal – spurious “forensic audits,” look-alike logos and names that mimicked agencies like the FDIC, phony connections to federal programs, bogus buddy-buddy relationships with lenders, Do Not Call violations, and just flat-out bad advice. For example, one defendant insisted on cash on the barrelhead and then told people to stop paying their mortgages – without disclosing that consumers could face bankruptcy, risk losing their homes, and kill their credit ratings.
The six cases announced by the FTC alleged violations of Section 5 of the FTC Act and the MARS Rule. Issued by the FTC in 2010 and now known as Regulation O, the MARS Rule makes it illegal for mortgage foreclosure rescue and loan modification outfits to collect fees until homeowners have a written offer from their lender or servicer that the homeowner decides is acceptable. The cases allege that the defendants misrepresented the results they’d get for consumers, illegally charged advance fees, and failed to make required disclosures.
Who did the FTC sue? Utah-based Danielson Law Group, Fort Lauderdale’s FMC Counseling Services, Jacksonville’s Lanier Law, Austin-based Home Relief Foundation, and two California companies, Mortgage Relief Advocates and CD Capital Investments. Also named are dozens of individuals and affiliates. Find out more about the status of the six FTC law enforcement actions.
Violations of the MARS Rule can make homeowners and law enforcers see red. Read Mortgage Assistance Relief Services Rule: A Compliance Guide for Business for a summary of what the Rule requires. Bookmark the Business Center's Mortgages page for easy access to case highlights and other resources.