Beware of Scams

At The SOS Law Group, we are dedicated to the honest and ethical treatment of homeowners in difficulty.  Unfortunately, this is not the case with many individuals and companies that advertise on the internet offering loan modification and/or short sale services.  For whatever reason, certain of these service providers prey on distressed homeowners.  They offer themselves as saviors and collect up-front fees but, sadly, they end up as nothing more than crooks cheating you out of your hard earned money in an already difficult situation.

The Federal Government, in collaboration with the States, has recently enacted new rules protecting homeowners in distress.  The laws are aimed at curbing abuses by “Mortgage Assistance Relief Service providers.”  We are providing you this information, basically unchanged from the government website, to help you understand your legal rights and so that, hopefully, you will recognize when you may be getting scammed:

Rule Outlaws Advance Fees and False Claims, Requires Clear Disclosures

The Federal Trade Commission (FTC) has developed new rules related to Mortgage Assistance Relief Servicers that generally bans providers of mortgage foreclosure rescue and loan modification services from collecting fees until homeowner has obtained a written offer from the lender or servicer that the homeowner decides is acceptable. The FTC has carved out an exception for attorneys who may, in fact, collect upfront fees.

The purpose of this rule is to protect homeowners under duress from scams that have sprung up across the United States.  Unscrupulous crooks boldly “guarantee” that they can negotiate a loan modification, a short sale, or some other type of relief from foreclosure with the consumer’s lender.  Many of these crooks develop direct mail campaigns designed to deceive homeowners by stating that they are affiliated with the government, a law office, or government housing assistance programs.

Advance Fee Ban

Under the new federal rules, the collection of advance fees by anyone other than licensed attorneys has been expressly banned.   Under this provision, mortgage assistance relief service providers (MARS) may not collect any fees until they have provided a homeowner with a written offer from the lender or servicer that the homeowner deems acceptable, as well as a written document from the lender or servicer describing the key changes to the mortgage that would result if the consumer accepts the offer. The MARS is required to also remind homeowners of their right to reject the offer without any charge being assessed to them.


The new federal rules also require MARS to disclose key information to consumers to protect them from being misled and to help them make better informed decisions.  In their advertising and marketing to consumers (such as telemarketing calls), MARS must disclose that:

  • they are not associated with the government, and their services have not been approved by the government or the consumer’s lender;
  • the lender may not agree to change the consumer’s loan; and
  • if MARS tell consumers to stop paying their mortgage, they must also tell them that they could lose their home and damage their credit rating.

MARS must also explain in their communications to consumers that they can stop doing business with the MARS at any time and can accept or reject any offer the MARS obtains from the lender or servicer.  If a consumer rejects an offer, the MARS must disclose that the consumer does not have to pay the any fee to the MARS.  Any fee requested from the consumer must be clearly explained.

Prohibited claims

Under the new rules, MARS are prohibited from making any false or misleading claims about their services, including claims about:

  • the likelihood of consumers getting the results they seek;
  • the company’s affiliation with government or private entities;
  • the consumer’s payment and other mortgage obligations;
  • the company’s refund and cancellation policies;
  • whether the company has performed the services it promised;
  • whether the company will provide legal representation to consumers;
  • the availability or cost of any alternative to for-profit mortgage assistance relief services;
  • the amount of money a consumer will save by using their services; or
  • the cost of the services.

In addition, the rule bars MARS from telling consumers to stop communicating with their lenders or servicers.  MARS must also have reliable evidence to back up any claims they make about the benefits, performance, or effectiveness of the services they provide.

Attorney exemption

Attorneys are generally exempt from the new federal rule if they meet three conditions:  1) they are engaged in the practice of law; 2) they are licensed in the state where the consumer or the dwelling is located, and 3) they are complying with state laws and regulations governing attorney conduct related to the rule.  To be exempt from the advance fee ban, attorneys must meet a fourth requirement – they must place any fees they collect in a client trust account and abide by state laws and regulations covering such accounts.

All provisions of the rule became 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.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them.  To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357).  The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad.  The FTC’s website provides free information on a variety of consumer topics.

To determine if you qualify for a short sale, call The SOS Law Group at 

Or simply complete the Fast Contact Form on this page and one of our attorney’s will contact you.


Short Sale Loan Modification Foreclosure Defense