Currently several states have laws which prevent or severely limit up front payments from homeowners to foreclosure prevention specialists, or regulate who can be involved in assisting with a loan modification or other foreclosure prevention counseling services. In order to make all the rules consistent nation-wide the FTC has instituted the Mortgage Assistance Relief Services (MARS) regulations that will go into effect between December 29, 2010 and January 31, 2011 for the mortgage relief and loan modification industry.
A ban on up front fees will go into effect January 31, 2011. All other provisions will become law at the end of the 2010 year. Fees cannot be charged until the homeowner has an acceptable offer from their lender or servicer for a loan modification or other workout.
The regulations also ban these services from posing as a government service or claiming to be approved by any government service. They must provide a written summary of the changes that the mortgage provider is proposing to make and to remind the homeowner that they have the option of turning down the offer. These companies, if they advise the homeowner to stop paying the mortgage in order to qualify for one of the services offered must also advise that doing so could lead to losing the property and to a lower credit score.
Costs and guarantees must be advertised up front. No claim that a particular outcome will happen with any certainty can be made.
Attorneys actively practicing law in the state where the property is located are excluded from the new FTC MARS regulations.
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