Credit Report Errors

A February study from the Federal Trade Commission says that 20% of Americans have errors on at least one of their three credit reports (from Experian, Transunion and Equifax ) and that 5% had mistakes that "could led to them paying more for products such as auto loans and insurance."

http://www.mainstreet.com/article/moneyinvesting/credit/debt/cfpb-lowers-boom-credit-report-furnishers?puc=yahoo&cm_ven=YAHOO&utm_source=Sept+23+email&utm_campaign=9%2F23%2F13&utm_medium=email

Here’s a snapshot of relevant points from the FTC report:

• 25% of U.S. consumers found errors on their credit reports that could crimp their credit health.
• 20% of consumers had an error on their credit report that was corrected by the credit agency after the mistake was disputed.
• 80% of consumers who filed disputes had the mistake “modified” by the credit report agency.
• 5% of consumers had a maximum score change of more than 25 points, and only one in 250 consumers had a maximum score change of more than 100 points.

Credit reports are free through annualcreditreport.com, FTC officials note — and contact the credit bureau right away to fix a mistake. That’s especially important before buying a home, car or applying for a credit card or insurance policy.

Tampa Based Pay Day Loan Scheme

Federal Trade Commission, a U.S. district court has halted a Tampa, Fla.-based operation that promised to help consumers get payday loans.

The FTC alleges that defendants Sean C. Mulrooney and Odafe Stephen Ogaga and five companies they controlled used websites with the names Vantage Funding, Ideal Advance, Loan Assistance Company, Palm Loan Advances, Loan Tree Advances, Pacific Advances, and Your Loan Funding to collect consumers’ information. They collected names, Social Security numbers, bank routing numbers, and bank account numbers, which allowed them to access consumers’ checking accounts.

The defendants victimized tens of thousands of consumers, taking more than $5 million from their bank accounts, the agency alleges.

In two previous cases, American Credit Crunchers, LLC and Broadway Global Master Inc., the defendants allegedly attempted to collect on payday loan debts that either didn’t exist or weren’t owed to them.
For additional consumer information on payday loans, see, Online Payday Loans.

New FTC Rule Impacts Realtors' Short Sale Business

The Mortgage Assistance Relief Services (MARS) rule, which applies to residential real estate transactions, took effect January 31.


http://www.ftc.gov/opa/2011/02/mars.shtm


As of January 31, 2011, companies that offer to help homeowners get their loans modified or sell them other types of mortgage assistance relief services are no longer allowed to charge up-front fees. Under the rule, a mortgage assistance relief company may not collect a fee until the consumer has signed a written agreement with the lender that includes the relief obtained by the company. When the company presents the consumer with that relief, it must inform the consumer, in writing, that the consumer can reject the offer without obligation and, if the consumer accepts, the total fee due. Before the consumer agrees to accept the mortgage relief, the company must also provide a written notice from the lender or servicer showing how the relief will change the terms of the consumer’s loan (including any limitations on a trial loan modification).

Attorney exemption

Attorneys are generally exempt from the rule if they provide mortgage assistance relief services as part of the practice of law, are licensed in the state where the consumer or dwelling is located, and comply with state laws and regulations governing attorney conduct related to the rule. To be exempt from the advance fee ban, attorneys must also place any advance fees they collect in a client trust account and abide by state laws and regulations covering such accounts. Flat Fee Cases are not advance fees.

Realtors must comply with the rule by not taking upfront fees and using specific disclosure language. The rule pertains to such practices as advertising short sale negotiation services or other short sale expertise, communicating with a consumer about a possible short sale before the listing agreement is executed, negotiating a short sale on behalf of a consumer, or arranging a short sale negotiation for a consumer.

A real estate professional now needs to include a clear and prominent disclosure in all commercial messages that advertise short sale services. In addition, second and third disclosures are required by real estate professionals before they begin mortgage assistance services on their clients’ behalf and at the time they present their client with the lender’s short sale approval letter.

FTC CHARGES MORTGAGE RELIEF OPERATION WITH DECEIVING DISTRESSED HOMEOWNERS

The Federal Trade Commission (FTC) announced yesterday that it has charged a national operation with marketing bogus loan modification services, according to an FTC press release. U.S. Mortgage Funding Inc., Debt Remedy Partners Inc., Lower My Debts.com LLC, David Mahler, Jamen Lachs and John Incandela, Jr. allegedly violated the FTC Act and the FTC's Telemarketing Sales Rule by falsely claiming they would obtain mortgage modifications that would make consumers' loan payments substantially more affordable. According to the FTC's complaint, the defendants targeted financially distressed consumers using direct mail, the Internet and telemarketing, and falsely promised they would get loan modifications to make consumers' mortgages much more affordable, or fully refund their money if they failed. The defendants charge up to $2,600 for their services and typically ask for half of the fee up-front, claiming a success rate of up to 100 percent.
 
http://www.ftc.gov/opa/2011/03/usmortgage.shtm

FTC Issues Final Mortgage Assistance Relief Services (MARS) Rule, Banning Advance Fees and Requiring Various Disclosures

The FTC issued its final Mortgage Assistance Relief Services (MARS) Rule and Statement of Basis and Purpose concerning the practices of for-profit companies that, in exchange for a fee, offer to work on behalf of consumers to help them obtain modifications to the terms of mortgage loans or to avoid foreclosure on those loans.


In sum, the Final Rule, among other things, would: (1) prohibit providers of such mortgage assistance relief services from making false or misleading claims; (2) mandate that providers disclose certain information about these services; (3) bar the collection of advance fees for these services; (4) prohibit anyone from providing substantial assistance or support to another they know or consciously avoid knowing is engaged in a violation of the Rule; and (5) impose recordkeeping and compliance requirements.

A copy of the final rule is available online at: http://www.ftc.gov/os/2010/11/R911003mars.pdf

Advance fee ban

Under this provision of the Final Rule, MARS companies may not collect any fees until they have provided consumers with a written offer from their lender or servicer that the consumer decides is acceptable, and a written document from the lender or servicer describing the key changes to the mortgage that would result if the consumer accepts the offer. MARS companies also must remind consumers of their right to reject the offer without any charge.

Disclosures

In their advertising and in communications directed at individual consumers (such as telemarketing calls), MARS companies must disclose that:

• they are not associated with the government, and their services have not been approved by the government or the consumer’s lender;

• the lender may not agree to change the consumer’s loan; and

• if companies tell consumers to stop paying their mortgage, they must also tell them that they could lose their home and damage their credit rating.

MARS companies also must explain in their communications to consumers that they can stop doing business with the company at any time, can accept or reject any offer the company obtains from the lender or servicer, and, if they reject the offer, they don’t have to pay the company’s fee. MARS companies also must disclose the amount of the fee.

Prohibited claims

The MARS Rule prohibits mortgage relief companies from making any false or misleading claims about their services, including claims about:

• the likelihood of consumers getting the results they seek;

• the company’s affiliation with government or private entities;

• the consumer’s payment and other mortgage obligations;

• the company’s refund and cancellation policies;

• whether the company has performed the services it promised;

• whether the company will provide legal representation to consumers;

• the availability or cost of any alternative to for-profit mortgage assistance relief services;

• the amount of money a consumer will save by using their services; or

• the cost of the services.

In addition, the rule bars mortgage relief companies from telling consumers to stop communicating with their lenders or servicers. MARS companies also must have reliable evidence to back up any claims they make about the benefits, performance, or effectiveness of the services they provide.

Attorney exemption

Attorneys are generally exempt from the rule if they meet three conditions: (1) they are engaged in the practice of law; (2) they are licensed in the state where the consumer or the dwelling is located; and (3) they are complying with state laws and regulations governing attorney conduct related to the rule.

In order to be exempt from the advance fee ban, attorneys must also meet a fourth requirement: they must place any fees they collect in a client trust account, and abide by state laws and regulations covering such accounts.

The FTC and states may enforce the Rule. However, before a state brings such an action, states must give 60 days advance notice to the Commission or other “primary federal regulator” of the proposed defendant, and the regulator has the right to intervene in the action.

All provisions of the rule except the advance-fee ban will become effective December 29, 2010.

The advance-fee ban provisions will become effective January 31, 2011.

FTC Issues Proposed Mortgage Advertising Rules

The Federal Trade Commission issued a proposed rule would prohibit all material misrepresentations in advertising about consumer mortgages, allow civil penalties, and allow enforcement by the states.


The Federal Register Notice is available at:
http://www.ftc.gov/os/fedreg/2010/september/100922mortgageadvertising.pdf

The proposed rule lists 19 examples of misrepresentations about fees, costs, obligations, and other aspects of credit that would be violations. However, the proposed rule does not include any advertising disclosure requirements.

The proposed rule would apply to: (1) mortgage lenders, brokers, and servicers; (2) real estate agents and brokers; (3) advertising agencies; (4) home builders; (5) lead generators; (6) rate aggregators; and (7) other entities under the FTC’s jurisdiction.

As you may recall, currently under the FTC Act, the Commission may bring actions against those under its jurisdiction who engage in deceptive mortgage advertising, and seek injunctive relief against them. Under the proposed rule, the FTC would be able to bring actions against violators to seek civil penalties in addition to injunctions. The proposed rule would also allow the states to bring actions for civil penalties for violations of the rule.

The FTC is seeking comments about the proposed rule’s costs and benefits, including whether any alternatives would adequately protect consumers at a lower cost. The FTC seeks public input on whether there are advertising disclosures that the Commission should include in the rule. The FTC also seeks public comment on whether the rule should include a provision that prohibits persons from providing substantial assistance to those who violate the rule.


The Notice of Proposed Rulemaking has a 45-day public comment period ending November 15, 2010.

FTC Settles Mortgage Lending Discrimination Case for $1.5M

The Federal Trade Commission reached a $1.5 Million settlement with a mortgage lender and its owner as to charges that the lender illegally charged Latino consumers higher prices for mortgage loans than non-Latino white consumers, which could not be explained by the applicants’ credit characteristics or underwriting risk.


Copies of the FTC’s complaint, and the Stipulated Final Judgment and Order For Permanent Injunction and Other Equitable Relief, are available at:

http://www.ftc.gov/os/caselist/0623061/index.shtm

The FTC filed a complaint in the U.S. District Court for the Central District of California on May 7, 2009, alleging that Golden Empire Mortgage, Inc. and Howard D. Kootstra violated the Equal Credit Opportunity Act. According to the FTC, the defendants allegedly gave loan officers and branch managers wide discretion to charge some borrowers, in addition to the risk-based price, “overages” through higher interest rates and higher up-front charges. The FTC alleged that the defendants then paid loan officers a percentage of the overages as a commission, failed to monitor whether Latino consumers were paying higher overages than non-Latino white borrowers.

FTC

The Federal Trade Commission (FTC) has banned eight marketers from selling loan modification or foreclosure relief services. The bans result from settlements the marketers entered into with the FTC.


According to the FTC's allegations, the marketers charged homeowners up-front fees and falsely claimed they could get their mortgage loans modified or prevent foreclosure on their homes. The settlements in three separate actions are part of the FTC’s ongoing efforts against loan modification scams.

Companies named as defendants in the settlement include Federal Loan Modification Law Center, Loss Mitigation Services and Hope Now Modifications. A complete breakdown of the settlement actions can be found on the FTC website

FTC Bans Deceptive Marketers from Selling Mortgage Relief Services

As part of an ongoing effort against scams that target financially distressed consumers, the Federal Trade Commission (FTC) has banned several marketers from selling mortgage modification or foreclosure relief services


http://www.dsnews.com/articles/ftc-bans-deceptive-marketers-from-selling-mortgage-relief-services-2010-07-28

FTC Crackdown

The Federal Trade Commission announced several new developments in its crackdown on fraudulent loan modification and foreclosure relief companies. One settlement order bans 16 marketers from the mortgage modification or foreclosure relief business, another requires payment of $11.4 million for violating a previous court order the FTC obtained against the same scammer for fraudulent telemarketing practices, and a new FTC lawsuit charges another online marketing operation with masquerading as a government mortgage assistance program.


The FTC is focusing on companies that charge consumers up-front fees and made false promises that they could get their loans modified or prevent foreclosure.

Some highlights include:

- Impersonation of MakingHomeAffordable.gov

- “Federal Loan Modification Law Center,” charging largely upfront fees of as much as $3k but not delivering services

- False claims of being able to obtain mortgage loan modifications for consumers in all or virtually all cases, false “money-back guarantees,” and false statements of affiliation with HOPE NOW

- Misleading “official government agency seals” or logos and links to federal government Web sites




For more detailed information, and copies of the court filings, please see:

http://www.ftc.gov/opa/2010/06/loanmods.shtm