Fees From Mars: Why the FTC Needs to Regulate Mortgage Assistance Relief Services (MARS) Fees
Providers of mortgage assistance relief services offer to help homeowners avoid foreclosure by negotiating with creditors on behalf of homeowners for loan modifications. Such providers charge a fee for these services, and have in the past often charged this fee upfront rather than after successful negotiations on the homeowner’s behalf.
The FTC adopted a rule, pursuant to the 2009 Omnibus Appropriations Act and Credit Card Accountability Responsibility and Disclosure Act of 2009, that bars Mortgage Assistance Relief Services (MARS) providers from making false or misleading claims, institutes certain disclosure requirements relating to these services, and prohibits companies from charging fees upfront. This Recent Development argues that the FTC’s rule is a good first step in regulating the MARS industry, but that the FTC should have gone further and adopted regulations regarding the fees that MARS providers can charge. Specifically, the FTC should have restricted fees to fifteen percent of the savings that a borrower receives under a modification.