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FTC proposes rules for mortgage modification firms that are similar to a law put forward in Illinois for debt settlement comp
By Marvin Milner on Feb 6th, 2010
Some consumers may be struggling with paying off their mortgage, which may make them turn to a firm that claims to offer help with home loans.
However, some of these companies may demand the payment of fees before they deliver their services, a practice that the Federal Trade Commission is looking to stop. New regulations from the FTC would stop these companies from collecting fees until they've delivered on promises made to their clients.
Treasury Secretary Timothy Geithner praised the FTC for its proposal, saying that it will add a "strong set of safeguards" for consumers.
"Far too many homeowners have paid up-front fees to bad actors who promised loan modifications but never delivered," Geithner said.
The rules proposed by the FTC are similar in scope to those suggested by others with regard to debt settlement companies. Recently, Illinois Attorney General Lisa Madigan proposed legislation that would regulate debt settlement companies in the state.
If passed, the law would forbid companies from asking for up-front fees and would also require debt settlement firms to get a license to practice in the state.
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