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The Federal Trade Commission testified before the U.S. Senate Committee on Commerce, Science, and Transportation’s Subcommittee on Interstate Commerce, Trade, and Tourism, about the Commission’s continuing efforts to protect subprime mortgage borrowers.

The testimony described the agency’s priorities, including deceptive mortgage advertising, deceptive or unfair servicing practices, discrimination in lending, and foreclosure rescue scams, and it emphasized the following points:

  • The Commission has been at the forefront of the fight against deceptive subprime lending and servicing practices since 1998, when it filed its case against Capital City Mortgage. The case alleged that the defendant took advantage of African-American consumers in Washington, D.C.

  • In the past decade, the FTC has brought 22 actions in the mortgage lending industry, with particular attention to entities in the subprime markets. Through these cases, many of which have challenged deceptive advertising and marketing practices, the FTC has returned more than $320 million to consumers.

  • The Commission is investigating more than a dozen mortgage companies as part of a mortgage advertising law enforcement sweep. Last year, the agency sent more than 200 warning letters to mortgage brokers, mortgage lenders, and media outlets that carry their home mortgage advertisements. FTC staff recently reviewed the current advertising of those who received warning letters and will follow up with law enforcement where appropriate.

  • With the recent rapid increase in mortgage delinquencies and foreclosures, the FTC has intensified its focus on protecting consumers from scams that promise to rescue them from mortgage foreclosure. The Commission has filed law enforcement actions against defendants allegedly engaged in mortgage foreclosure fraud, and has additional nonpublic matters under investigation.

  • This month, FTC staff filed a public comment in response to the Federal Reserve Board’s proposed rules to restrict certain mortgage practices. The comment supports the Board’s goals of protecting consumers in the mortgage market from unfair, abusive, or deceptive lending and servicing practices. If the Board’s rules are finalized, the FTC will have the authority to enforce them against nonbank entities under its jurisdiction. The FTC’s enforcement efforts would be more effective if it could obtain civil penalties for violations of these rules.

  • To empower consumers to better protect themselves from potentially harmful conduct, the FTC’s extensive consumer education efforts include new educational materials, in English and Spanish, about deceptive mortgage advertisements, buying a home, mortgage foreclosure rescue scams, and steps borrowers can take to avoid foreclosure.

  • The Commission engages in research and policy development to better understand and protect consumers in the mortgage marketplace. Next month, FTC staff economists will host a conference to assess the role of consumer information in the current mortgage crisis, and to discuss strategies for ensuring that mortgage disclosures will be designed to provide the greatest benefit to consumers.

The Commission vote authorizing the presentation of the testimony and its inclusion in
the formal record was 4-0.

Copies of the testimony are available from the FTC’s Web site at and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad.

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