Mortgage Assistance Relief Services-MARS-Requires Clear Disclosures From Foreclosure Rescue Companies

In attempting to prevent foreclosure, many homeowners consider a short sale or loan modification. Upon contacting or being contacted by a foreclosure rescue or mortgage modification service, some homeowners get taken advantage of by fraudulent ‘companies’ that don’t provide what they promise.

(By the way, this article was written by a highly effective real estate marketing specialist from a Phoenix Title Company.)

Scam foreclosure rescue companies use different tactics to find homeowners in distress: Some sort through foreclosure notices in newspapers, Internet or through public filings at government offices. They then send personalized postcards, flyers, or even go door-to door. Others target homeowners with ads on the Internet, Facebook, TV, newspapers, posters on telephone poles, signs off freeway exits etc. The scam artists use emotional messages, like:

  • Stop Foreclosure Now!
  • We guarantee to stop foreclosure.
  • Keep Your Home. We can help!
  • We have relationships within (insert bank) that can speed up your approval.
  • Save Your Home. Guaranteed. Free Consultation
  • We stop foreclosures

Once the homeowner responds, foreclosure scam companies use a variety of tactics to steal their money and in some cases, their home. They offer fake "counseling" or "help" (for a fee of course) or even trick homeowners into signing away title to their home.

Many homeowners seeking to prevent foreclosure, elect for a short sale. Some phony short sale negotiation companies make wild claims like:

  • Promising to speed up the short-sale process
  • Guaranteed short sale approval.
  • 100% short sale approval
  • We guarantee to close on your short sale on X days

Consumers don’t know where to turn or who to trust. On 11/19/2010, In response to wild claims made by foreclosure rescue and modification companies, the Federal Trade Commission announced the MARS rule or Mortgage Assistance Relief Services rule. The MARS rule outlaws advance fees, false claims and requires clear disclosures to consumers.

How the FTC MARS Rule Protects Consumers

The MARS Rule bars providers from telling consumers to stop communicating with their lenders or mortgage servicers, and from misleading them about key facts such as:

  • The likelihood of getting the results they want, and how long it will take
  • Their affiliation with public or private entities
  • Payment and other existing mortgage obligations
  • Refund and cancellation policies

In addition, the MARS rule requires providers to tell consumers:

  • They are a for-profit business
  • The total amount the consumer will pay
  • That neither the government nor the consumer’s lender has approved their services
  • There is no guarantee that the lender will agree to change their loan

The MARS rule applies to for-profit companies that, in exchange for a fee, offer to work with lenders and servicers on behalf of consumers to modify the terms of mortgage loans or to take other steps to avoid foreclosure on those loans. The rule generally exempts entities that own or service mortgage loans. For more information about the MARS rule, visit the Federal Trade Commission website.