Agency Wants More Authority on Mortgages
By Tim Holland
The Federal Trade Commission (FTC) went before the U. S. House Subcommittee on Housing and Community Opportunity of the Committee on Financial Services on Wednesday to outline the efforts it has been undertaking to combat mortgage relief and counseling fraud. It also outlined the programs it has put into place to help consumers protect themselves and asked for additional help from Congress to help the consumer going forward.
Associate Director of the FTC’s Division of Financial Practices, Peggy Twohig, testified that the Commission has brought 11 cases targeting mortgage foreclosure rescue and loan modification scams in a little over one year. In April, the FTC announced law enforcement actions and consumer education initiatives as part of a federal-state crackdown that included sending warning letters to 71 companies for marketing potentially deceptive mortgage loan modification and foreclosure assistance programs. The testimony described defendants’ tactics, which sometimes include falsely appearing to be affiliated with a non-profit or government entity or endorsed by government officials.
While explaining that they have made great progress in addressing the issue they also stated, emphatically, that they are in need of more authority that only Congress can grant.
The testimony noted that the FTC has new rulemaking authority under the Omnibus Appropriations Act of 2009 to prohibit unfair and deceptive practices with respect to mortgage loans. The Act, which directed the Commission to commence within 90 days a rulemaking with respect to mortgage loans, allows the FTC to use the relatively streamlined notice and comment rulemaking procedures in issuing these rules. As part of this rulemaking proceeding, the Commission intends to address unfair or deceptive acts and practices regarding mortgage loan modification and foreclosure rescue scams.
The Commission also recommended that, in order to enhance the FTC’s consumer protection efforts, Congress:
• Authorize the agency to employ notice and comment rulemaking procedures to establish rules pursuant to the FTC Act that prohibit unfair or deceptive acts and practices relating to all financial services;
• Authorize the agency to obtain civil penalties for unfair or deceptive acts and practices relating to all financial services and authorize the agency to bring suit in its own right in federal court to obtain civil penalties;
• Ensure that the FTC is considered as Congress moves forward in determining how to modify federal oversight of consumer financial services; and
• Provide additional resources to the FTC to increase its law enforcement activities relating to financial services and to expand its critical research on the efficacy of mortgage disclosures and other topics.
The FTC requests represent a continuing effort of a variety of federal regulatory agencies to obtain expanded authority in protecting the consumer in the future in an effort to change the loose regulatory environment that is blamed for the current financial crisis.
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