12 C.F.R. § 1015.5

Prohibition on collection of advance payments and related disclosures

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It is a violation of this rule for any mortgage assistance relief service provider to:

(a) Request or receive payment of any fee or other consideration until the consumer has executed a written agreement between the consumer and the consumer's dwelling loan holder or servicer incorporating the offer of mortgage assistance relief the provider obtained from the consumer's dwelling loan holder or servicer;

(b) Fail to disclose, at the time the mortgage assistance relief service provider furnishes the consumer with the written agreement specified in paragraph (a) of this section, the following information: “This is an offer of mortgage assistance we obtained from your lender [or servicer]. You may accept or reject the offer. If you reject the offer, you do not have to pay us. If you accept the offer, you will have to pay us [same amount as disclosed pursuant to § 1015.4(b)(1)] for our services.” The disclosure required by this paragraph must be made in a clear and prominent manner, on a separate written page, and preceded by the heading: “IMPORTANT NOTICE: Before buying this service, consider the following information.” The heading must be in bold face font that is two point-type larger than the font size of the required disclosure; or

(c)(1) Fail to provide, at the time the mortgage assistance relief service provider furnishes the consumer with the written agreement specified in paragraph (a) of this section, a notice from the consumer's dwelling loan holder or servicer that describes all material differences between the terms, conditions, and limitations associated with the consumer's current mortgage loan and the terms, conditions, and limitations associated with the consumer's mortgage loan if he or she accepts the dwelling loan holder's or servicer's offer, including but not limited to differences in the loan's:

(i) Principal balance;

(ii) Contract interest rate, including the maximum rate and any adjustable rates, if applicable;

(iii) Amount and number of the consumer's scheduled periodic payments on the loan;

(iv) Monthly amounts owed for principal, interest, taxes, and any mortgage insurance on the loan;

(v) Amount of any delinquent payments owing or outstanding;

(vi) Assessed fees or penalties; and

(vii) Term.

(2) The notice must be made in a clear and prominent manner, on a separate written page, and preceded by heading: “IMPORTANT INFORMATION FROM YOUR [name of lender or servicer] ABOUT THIS OFFER.” The heading must be in bold face font that is two-point-type larger than the font size of the required disclosure.

(d) Fail to disclose in the notice specified in paragraph (c) of this section, in cases where the offer of mortgage assistance relief the provider obtained from the consumer's dwelling loan holder or servicer is a trial mortgage loan modification, the terms, conditions, and limitations of this offer, including but not limited to:

(1) The fact that the consumer may not qualify for a permanent mortgage loan modification; and

(2) The likely amount of the scheduled periodic payments and any arrears, payments, or fees that the consumer would owe in failing to qualify.

Notes of Decisions

Cited in 12 cases (2 in the last 5 years), 2014–2021 · leading case: Fed. Trade Comm'n v. E.M.A. Nationwide, Inc., 767 F.3d 611 (6th Cir. 2014).

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Fed. Trade Comm'n v. E.M.A. Nationwide, Inc., 767 F.3d 611 (6th Cir. 2014). “The advance fee ban contained in 12 C.F.R. § 1015.5 went into effect on January 31, 2011.”

Fed. Trade Comm'n v. Lanier Law, LLC, 194 F. Supp. 3d 1238 (M.D. Fla. 2016). · cites it 2× “Here, the FTC asserts that Defendants violated the prohibition on advance payments set forth in 12 C.F.R. § 1015.5 (a), made material misrepresentations regarding their services in violation of 12 C.”

CFPB v. Consum. First Legal Grp., LL, 6 F.4th 694 (7th Cir. 2021). “Some of the practices on which the court based its liability ﬁndings are, at this point, uncontested: collecting upfront fees, 12 C.F.R. § 1015.5 (a); misrepresenting to consumers that they would receive legal representation, id.”

Fed. Trade Comm'n v. Lake, 181 F. Supp. 3d 692 (C.D. Cal. 2016). · cites it 2× “12 C.F.R. § 1015.5 . This regulation and other related provisions are together known as the “MARS Rule.”

Consum. Fin. Prot. Bureau v. Mortg. Law Grp., LLP, 196 F. Supp. 3d 920 (W.D. Wis. 2016). · cites it 2× “I conclude that: 1) The initial and monthly retainer fees charged by The Mortgage Law Group and Consumer First Legal Group qualify as advance fees under 12 C.F.R. § 1015.5 (a). 2) The companies failed to make the disclosure required under 12 C.”

In the Matter of Zak (Mass. 2017). “02 (2) (2007); 12 C.F.R. §§ 1015.5 and 1015.7 (2017). The respondent does not dispute either that he charged advance fees or that the advance fees were not deposited into a client trust account.”

FTC v. Charles Marshall (9th Cir. 2019). “§ 45 (a)(1); 12 C.F.R. § 1015.5 . Thus, we conclude that Marshall failed to create a genuine dispute as to whether he was personally liable for the common enterprise’s FTC Act and MARS Rule violations, such that injunctive relief against him was proper.”

State of Hawaii v. Robert Stone, II (9th Cir. 2021). “See 12 C.F.R. § 1015.5 (a) (forbidding mortgage relief service providers from collecting payment from clients in advance of executing a written contract); Haw.”

Consum. Fin. Prot. Bureau v. Mortg. Law Grp., LLP, 366 F. Supp. 3d 1039 (W.D. Wis. 2018). “The initial and monthly retainer fees charged by The Mortgage Law Group and Consumer First Legal Group qualify as advance fees under 12 C.F.R. § 1015.5 (a). 2. The companies failed to make the disclosure required under 12 C.”

In re Bacon, 799 S.E.2d 290 (S.C. 2017). “12 C.F.R. § 1015.5 . Attorneys are exempt from this rule if they meet certain criteria, including the attorney must be licensed to practice in the state where the consumer or the consumer’s home is located, must hold any advance fee in a client trust account until earned, and…”

State of Hawaii v. Stone (D. Haw. 2020). “” 12 C.F.R. § 1015.5 (a). Here, assuming that Stone was (or is) a “mortgage assistance relief service provider,” Plaintiff has provided no evidence that Stone requested or received payment before any relevant consumer executed a written agreement with his or her loan holder or…”

State of Hawaii v. Stone (D. Haw. 2020). “]” 12 C.F.R. § 1015.5 (a). A “mortgage assistance relief services provider” is defined as “any person that provides, offers to provide, or arranges for others to provide, any mortgage assistance relief service.”

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