An attorney who spoke at the Western States Loan Servicing Conference in Las Vegas predicts that the Federal Trade Commission will produce a “significant enforcement action” involving a major mortgage servicer within the next several months. Anand Raman, a partner at Skadden, Arps, Slate, Meagher & Flom, said the FTC has broad authority to scrutinize loan servicing practices under its broad authority to address “unfair and deceptive trade practices,” and that even practices that are not “manifestly illegal” may get servicers into trouble.

Issues the FTC and other regulatory agencies are likely to investigate include internal documentation, monthly billing statement information, and customer service, he said, noting that regulators are under political pressure to get tough with the mortgage industry. Read the rest of this entry »

Section 5 of the FTC Act Facts : 

The FTC Act provides a comprehensive framework for carrying out the Commission’s law enforcement initiatives. In executing its consumer protection law enforcement responsibilities, the Commission can rely both upon Section 5 of the FTC Act — which prohibits unfair or deceptive acts or practices — and upon a number of more specific consumer protection statutes. Under Section 5, the Commission has determined that a representation, omission, or practice is deceptive if: (1) it is likely to mislead consumers acting reasonably under the circumstances; and (2) it is material, that is, likely to affect consumers’ conduct or decisions with respect to the product at issue.(7) In August 1994, Congress amended Section 5 of the FTC Act to provide that an act or practice is unfair if the injury it causes or is likely to cause to consumers is: (1) substantial; (2) not outweighed by countervailing benefits to consumers or to competition; and (3) not reasonably avoidable by consumers themselves.(8)

The Federal Reserve Board:

Unfair practices

An act or practice is unfair where it:

• causes or is likely to cause substantial injury to consumers;

• cannot be reasonably avoided by consumers and;  is not outweighed by countervailing benefits to consumers or to competition. Public policy, as established by statute, regulation, or judicial decisions may be considered with all other evidence in determining whether an act or practice is unfair.

Deceptive practices An act or practice is deceptive where:

• a representation, omission, or practice misleads or is likely to mislead the consumer;

• a consumer’s interpretation of the representation, omission, or practice is considered reasonable under the circumstances and;

• the misleading representation, omission, or practice is material

From the FTC: 

A key part of the Commission’s privacy program is making sure companies keep the promises they make to consumers about privacy, including the precautions they take to secure consumers’ personal information. To respond to consumers’ concerns about privacy, many Web sites post privacy policies that describe how consumers’ personal information is collected, used, shared, and secured. Indeed, almost all the top 100 commercial sites now post privacy policies. Using its authority under Section 5 of the FTC Act, which prohibits unfair or deceptive practices, the Commission has brought a number of cases to enforce the promises in privacy statements, including promises about the security of consumers’ personal information. The Commission has also used its unfairness authority to challenge information practices that cause substantial consumer injury. To see the Commission’s Section 5 privacy cases, click here.

The Commission also examines and reports on privacy issues. Learn more about these issues and the Commission’s work by reading our Reports & Testimony, reviewing information about our Workshops, and by looking through our Press Room. Educating consumers and businesses about the importance of information privacy is also a central part of the Commission’s mission — click here to see our publications.

Laws & Rules

Federal Trade Commission Act
15 U.S.C. §§ 41-58, as amended.
Section 5 of the FTC Act prohibits unfair or deceptive acts or practices in the marketplace.

Watch the MSN video here

By Moe Bedard 

“Thousands Have Switched to FHASecure to Keep Their Homes - Why Not You?” - FHA Website

“only 266 such borrowers have cleared all FHA hurdles, according to data compiled by the Department of Housing and Urban Development that was provided to Reuters” - Reuters

“In only the first 4 months of FHASecure, more than 40,000 households have refinanced under the new housing insurance program to protect their families’ investment in the American Dream.” - FHA Website

“Here’s the truth: FHA Secure has received about 3,000 applications from homeowners who are delinquent on their loans and has closed on about 600 since September, that answer from an official HUD staffer who gave me the actual numbers after more than one request.” - Diana Olick

“More good news is that an additional 20,000 are in the pipeline and their approval is expected by the end of December. That will mean that in the first 4 months of the program, FHASecure will have helped 53,000 families and received more than 127,000 refinance applications from families whose loans are current or past due.” FHA Website

“To tell you the truth, we have seen only about a 1,000 delinquent borrowers, but that’s a good thing.” - Meg Burns Director of FHA Single Family Development Program

Is FHA just hyping the FHASecure so they can do the ol bait and switch?

It appears that they are blatantly advertising the FHASecure as a loan that has helped more people then it clearly has in order to entice Americans to inquire about the FHASecure Loan so they can then switch them to other FHA mortgage products.

This is in clear violation of the FTC Truth in Advertising laws that protects consumers against false and misleading Read the rest of this entry »