By: Shane M. Biffar

In July, the Consumer Financial Protection Bureau (“CFPB”) filed complaints in the district courts of California, Florida, and Wisconsin, against certain law firms and affiliated entities that market and sell purported mortgage assistance relief services (“MARS”) to borrowers facing foreclosure.

In each of these actions, the complaints allege that the defendants violated 12 CFR 1015 (“Regulation O” of the Consumer Financial Protection Act of 2010), which prohibits MARS providers from receiving fees from a borrower until after the borrower executes a loan modification agreement obtained through the efforts of the provider.

Other Regulation O violations alleged in the CFPB complaints include misrepresentations to Borrowers regarding (1) the provider’s likelihood of success in obtaining a loan modification, (2) the amount of time that will be required to accomplish the service or result, and (3) legal representation that the consumer will receive, where no legal service is being provided.