FTC Issues new rule to help protect consumers from loan modification scams

You have probably seen the ads for loan-modification firms that say they can get your loan modified, save you from losing your house, cut your interest rate, get you a short sale, or get your loan reduced.  Many of these firms will charge you thousands of dollars and pay up front, and then do very little or nothing to help you.  The FTC has issued a new rule called "MARS" (Mortgage Assistance Relief Services Rule) to help protect struggling homeowners -- most significantly, this new rule bans these mortgage-relief type-companies from collecting advance fees.  Mortgage relief companies must contact your lender and provide a written offer from the lender that the consumer deems acceptable prior to collecting a fee for this service. These mortgage modification companies also must now let you know that they are not associated with the government and are not allowed to keep clients from communicating with their lender. See the FTC website for more detail and info. 

These rules should help, but always beware of any company asking you for a fee in exchange for loan modification or counseling on a mortgage loan.  Assistance from a HUD-approved counselor through the Making Home Affordable program is always free.  See the Making Home Affordable website for more information.