The Federal Trade Commission announced today it plans to ban upfront fees charged to consumers who are looking for mortgage relief.
Under the new regulations, mortgage-relief businesses will be unable to claim affiliation with government programs or make guarantees.
The FTC rules, which were proposed in February, are part of the Obama administrations effort to help low to middle-income families struggling with credit debt and facing foreclosure, Bloomberg reports. Foreclosures in the U.S. jumped to their highest point in more than a decade in the third quarter of this year.
“The proposed rule would outlaw up-front fees so companies can’t take the money and run,” FTC Chairman Jon Leibowitz said. “Homeowners facing foreclosure or struggling to make mortgage payments shouldn’t have to contend with fraudulent companies that don’t provide what they promise.”
Companies who deal in mortgage-relief can also no longer tell homeowners to cease communications with lenders and must back up claims made in advertising, the news source says.
The new restrictions mirror the recently passed legislation against debt settlement companies.