Software Systems Exempt from FTC’s Ban on Upfront Mod Fees

The ""Federal Trade Commission"":http://www.ftc.gov (FTC) will enact a ban on advance fees charged for loan modification and mortgage assistance rescue services (MARS) starting January 31.[IMAGE]

The ban was put in place when the FTC ""issued the MARS final rule"":http://dsnews.comarticles/new-ftc-rule-aims-to-protect-homeowners-from-mortgage-relief-scams-2010-11-22 in November to prevent providers of such services from collecting upfront fees from distressed homeowners without successfully modifying their mortgage with lenders or servicers.

For-profit loan modification service providers cannot collect fees until consumers have ""a written and executed agreement"" from a lender or servicer, according to the

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FTC rule. However, it exempts fees charged in advance for loan modification products, such as software systems that produce mortgage modification documentation for the Home Affordable Mortgage Program (HAMP). According to the FTC, those who sell products for mortgage assistance relief are not engaged in unfair and deceptive practices.

Loan modification software like the do-it-yourself private label product ""TheModPost"":http://www.TheModPost.com from ""the Loan Post, Inc."":http://www.theloanpost.com/tlp.html is exempt from the FTC's rule banning advance fees.

The technology, which produces a bank-ready pre-qualified HAMP+NPV [net present value] loan modification package, is available on a private labeled basis to third-party homeowner advocates. The Loan Post, a Florida-based provider of custom-built loss mitigation software, charges a monthly fee to license the software.

""By using [the] private-label DIY [do-it-yourself] software product, loan modification and mortgage assistance relief companies under the new FTC rule are able to continue to provide services that help homeowners restructure their mortgages with banks and servicers in order to avoid foreclosure,"" said Chris Fuelling, CEO of the Loan Post, Inc. ""The FTC's final rule has provided clarity that providers of software and other loan modification products can charge consumers a reasonable upfront fee for their product.""