If you did not know, the Federal Trade Commission did come out with a new law to help homeowners from being scammed into paying upfront fees to modify their home loans.
However, Attorneys are exempt from the rule but they have to meet three conditions. Let’s review these and make sure you are working with an Attorney who is staying compliant and honest, while helping you save your home.
- They have to be engaged in the practice of law
- They are licensed in the state where the CONSUMER or dwelling is located
- They are complying with state laws and regulations governing attorney conduct related to the rule.
This is all good, but what about the collection of upfront fees? Are they allowed to collect these before the work is even done? Actually, YES they can collect upfront fees from you, however, there is a forth requirement to be able to collect up front.
- Any fees collected must be placed in a clients trust account and abide by state laws and regulations covering such accounts.
This rule became effective on December 29 2010, but the advance fee ban provisions will become effective January 31, 2011.
The FTC rulemaking proceeding was conducted pursuant to Congressional legislation sponsored in 2009 by Senators Jay Rockefeller and Byron Dorgan. The Final Rule applies only to entities within the FTC’s jurisdiction under the Federal Trade Commission Act, which excludes, among others, banks, savings and loans, federal credit unions, common carriers, and entities engaged in the business of insurance. In June 2009, the FTC issued an Advance Notice of Proposed Rulemaking seeking comment on the practices of for-profit mortgage relief companies. In February 2010, the FTC announced a Notice of Proposed Rulemaking and sought comments from interested persons, including advocates for consumers, the business community, and the legal profession.
