WASHINGTON, D.C.—Senator John D. (Jay) Rockefeller IV (D-WV), Chairman of the U.S. Senate Committee on Commerce, Science, and Transportation, issued the following statement in response to the Federal Trade Commission’s (FTC) new rule to prevent predatory companies from taking advantage of Americans on the brink of foreclosure:
“Americans struggling to pay their mortgages should not have to worry about scam artists stealing their last dollar,” said Senator Rockefeller. “Too many con men have preyed upon families on the verge of losing their homes with false promises of help. Hoping for relief, Americans have paid hundreds of millions of dollars only to lose their homes. I worked last year to enact a new law giving the FTC the authority to protect consumers from such scams. I applaud the FTC’s exercise of that authority and the rules it issued today. These actions will protect vulnerable homeowners at a time when they need it most.”
Chairman Rockefeller and Senator Byron Dorgan (D-ND) led the fight to provide the FTC with the authority to conduct mortgage-related rulemakings in the 2009 Omnibus Appropriations Act. In February 2009, Senator Rockefeller convened his first hearing as Chairman on consumer protection and the credit crisis, which focused both the Committee’s and the FTC’s attention on mortgage foreclosure rescue fraud. Additional information on this hearing can be found here.
The FTC rule will protect consumers by:
- Preventing mortgage assistance relief service (MARS) companies from charging upfront fees for any of their services;
- Allowing companies to collect fees only after consumers have agreed to settlements that are negotiated with lenders;
- Prohibiting these companies from telling consumers to stop communicating with their lenders or mortgage servicers;
- Prohibiting these companies from misleading consumers about key facts related to the company’s success rate, payment and mortgage obligations, and refund and cancellation policies; and
- Requiring MARS companies to make a number of clear and prominent disclosures, including information about the total cost of the services and a clear statement that there is no guarantee that lenders will agree to loan modifications.