The Mortgage Assistance Relief Services Rule A Compliance Guide For Business

The Federal Trade Commission (FTC), has issued a Rule to curb unfair and deceptive practices. If you offer mortgage assistance relief services or work with companies that do This guide, represents the views of FTC staff and is not binding on the Commission, offers tips on complying with the Rule: If you provide mortgage assistance relief services, it applies to you. Mortgage assistance relief service is defined as a service, plan, or program that s represented, expressly or implied, to help prevent/postpone foreclosure or help with loan mods, forbearance, short sales, deeds-in-lieu or time extensions to cure defaults or reinstate loans. It applies if you work directly with lenders/servicers or offer services to help consumers do it on their own Mortgage Brokers Yes- if you promote loan origination or refinancing to avoid foreclosure. Those who don t generally aren t covered by the Rule. Real Estate Agents Yes - if you promote services to help avoid foreclosure. No - to those who don t promote services this way Lenders/Servicers. Doesn t cover lenders/servicers that offer mortgage assistance on loans they own or service. Accountants/Financial Planners. No - if they don t claim expressly or by implication their services will get a loan mod, etc. Attorneys. Special provisions - See A Compliance Guide for Lawyers at www.business.ftc.gov Using attorneys to do some of your services doesn t exempt you from the Rule. Even if you don t provide mortgage relief services, you may have obligations . It s illegal to provide substantial assistance to someone if you know or consciously avoid knowing they re violating the Rule. What amounts to substantial assistance? Procuring leads for MARS providers, helping a MARS provider with its backroom operations, reviewing customer files, processing customers payments, or contacting customers servicers are examples. If you work with MARS providers, review their policies, procedures, and operations to make sure they comply - willful ignorance isn t a defense.

TRUTH-IN-ADVERTISING
It s illegal to misrepresent, either expressly or by implication, any material aspect of your service. That includes any info that s likely to affect a consumer s decision to use you or choose one service over another such as: the likelihood of getting a specific form of relief; how long it will take to get the relief; an affiliation with the government, public programs, or lenders/servicers; terms/conditions of homeowners mortgages refund/cancellation policies; whether homeowners will be getting legal services; benefits/costs of using alternatives to for-profit MARS providers; the amount homeowners may save if they use your service; the total cost of your service; the terms, conditions, or limitations of a lender/servicer s offer. If you make claims about the benefits, performance of your services, your statements must be truthful and you must have reliable evidence to back it up. if you claim We can reduce your mortgage payments by 20% to 50% it must accurately reflect results you ve achieved for previous customers. If you don t have solid proof, your claim is considered deceptive.

WHAT INFO MUST BE DISCLOSED TO CUSTOMERS OR PROSPECTS?

If you tell a customer they should stop making timely payments, you must tell them, using these words, If you stop paying your mortgage, you could lose your home and damage your credit rating.

DISCLOSURES IN ADS FOR A GENERAL AUDIENCE

ads like ads on TV, radio, or Internet, must clearly and prominently disclose 2 key facts, in these words: 1. [company] is not associated with the government, and our service is not approved by the government or your lender; and 2. Even if you accept this offer and use our service, your lender may not agree to change your loan. The two disclosures must be presented together. The Rule has specific requirements for presenting them.

DISCLOSURES IN COMMUNICATIONS WITH PROSPECTS

It requires disclosures in any consumer-specific commercial communication that is, a letter, call, email, text, directed at a specific person who has not yet signed up for service. It requires you clearly and prominently disclose 3 key facts, in these words: 1. You may stop doing business with us at any time. You may accept or reject the offer of mortgage assistance we obtain from your lender [or servicer]. If you reject the offer, you do not have to pay us. If you accept the offer, you will have to pay us [insert amount or method for calculating the amount] for our services. 2. [company] is not associated with the government, and our service is not approved by the government or your lender; and

3. Even if you accept this offer and use our service, your lender may not agree to change your loan. The three disclosures must be presented together. The Rule has specific requirements for presenting these disclosures.

DISCLOSURES WHEN YOU GIVE CUSTOMERS AN OFFER FROM THEIR LENDER

1. Must give a separate written page that clearly and prominently says This is an offer of mortgage assistance we obtained from your lender[or servicer]. You may accept or reject the offer. If you reject the offer, you do not have to pay us. If you accept the offer, you will have to pay us [same amount you disclosed upfront] for our services. 2. You must give a separate 1-page written notice from the customer s lender or servicer that explains all material differences between the offer of mortgage relief and the customer s current loan. examples of differences in loan terms that would be material include: principal balance; interest rate on the loan, inc the max rate and any adjustable rates; number of how much the customer must pay each month for PITI; any delinquent payments the customer payments on the loan; owes; any fees or penalties; duration of the loan. 3. If the offer is a trial loan mod that is, a loan mod that s temporary the written notice you give from their lender/servicer must disclose the material terms, conditions, and limitations of this type of relief, including: it s a trial loan mod and the duration of the trial period; That the customer may not qualify for a permanent loan mod; and If the customer doesn t qualify, the likely amount in suspended payments, arrears, or fees they would owe once the trial mod period ends. The Rule has specific requirements for presenting these disclosures to customers.

HOW DO I MAKE DISCLOSURES CLEAR AND PROMINENT?

The Rule has more details on how to make sure your disclosures are clear and prominent.

WHEN CAN I COLLECT MY FEE? You can t until you ve met 3 requirements:
1. You get an offer of mortgage relief from your customer s lender/servicer. You must have persuaded the lender/servicer to reduce, modify, or otherwise change the terms of the customer s mortgage loan; 2. You give your customer a written offer from the lender to reduce, modify, or otherwise change the terms of the mortgage; and 3. Your customer accepts the written offer in the form of an executed written agreement with the lender that incorporates the changes to the terms of their mortgage. You can t collect any fees for steps you take as part of the process - illegal to charge separately for: an initial consultation with customer; reviewing a customer s mortgage or foreclosure docs to detect errors, inc robo signing or title problems; gathering financial or other info from customer; sending an app for mortgage relief or other request to a lender/servicer; communicating with a lender/servicer; responding to requests for info from lender/servicer.

RECORD KEEPING and MONITORING REQUIREMENTS

Must keep records at least 2 years from the date the document is created, generated, or received: Advertising/promo materials. Must keep a copy of each substantially different advertisement, brochure, telemarketing script, website, training document, or other material related to advertising/marketing your service. Sales records. Must keep records showing name, last known address, phone number of each customer; services used; how much they paid. maintain records only to customers who used your services, not for people who asked, but didn t sign up. Communications. Must keep copies of all written communications that occurred before they agreed to use your service. Agreements with customers. Must keep copies of all contracts/other agreements. Must take steps to ensure employees/independent contractors comply. At a min: performing random, blind monitoring, recording calls; a procedure for receiving/responding to complaints; investigating promptly and thoroughly; determining the number/nature of complaints involving employees/contractors; taking corrective action if not complying

FOR MORE INFORMATION

y MARS Rule www.ftc.gov/os/fedreg/2010/december/R911003mars.pdf y A Compliance Guide for Lawyers http://business.ftc.gov/documents/bus77-mortgage-assistance-relief-services-rule-lawyers y Division of Financial Practices, Bureau of Consumer Protection, FTC Washington, DC 20580 (202) 326-3224 To file a complaint or to get info on consumer issues: www.ftc.gov or 1-877-382-4357; Watch a video, How to File a Complaint, at www.ftc.gov/video to learn more. For free compliance resources, visit www.business.ftc.gov