Mortgage relief firms now prohibited to slap advance charges

Mortgage relief firms now prohibited to slap advance charges

Mortgage relief companies that charge advance fees to consumers would now be prohibited to do so, in an effort to protect Americans from dubious schemes, the U.S. Federal Trade Commission (FTC) announced today. The FTC now requires a written offer to be accepted by a customer before the lender can charge any fees.

“This rule will protect consumers from being victimized by these scams,” said FTC Chairman Jon Leibowitz in a statement released today.

Additional restrictions on mortgage relief firms include disallowing them to advertise being affiliated with any government body and placing guarantees that mortgage modification proposals would be approved by lenders. The firms must also inform consumers who discontinue their mortgage payments that doing so may impact their credit standing and forfeit their homes.

Americans are seeking ways to avoid being weighed down by too much debt payments.  The high joblessness have limited Americans’ budgets and the third quarter saw foreclosures on prime fixed-rate mortgages hitting its highest level in 12 years, according to the Mortgage Bankers Association.

The new FTC rules about mortgage relief were announced today during a news conference in Washington in the latest attempt by the administration of President Barack Obama to lift the financial burden somewhat from poor and middle-class Americans. The Department of Labor and the American Bar Association also unveiled a plan for workers in resolving wage disputes and improving mediation practices to help workers prevent foreclosures.

Vice President Joe Biden said at the conference that the government is constantly finding new ways to assist more Americans who are struggling financially. “In difficult economic times, we want to make sure all Americans, regardless of income or status, have access to the resources they need to pursue justice,” he said.

Posted by James Fried on Friday November 26 2010, 5:08 AM EST. Ref: Bloomberg. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0