3170-0007 MARS (O) 2018 renewal-30-dayFRN_OMB

30-day Federal Register version (2018 Renewal)
BUREAU OF CONSUMER FINANCIAL PROTECTION
PAPERWORK REDUCTION ACT SUBMISSION
INFORMATION COLLECTION REQUEST
SUPPORTING STATEMENT PART A
MORTGAGE ASSISTANCE RELIEF SERVICES
(REGULATION O) 12 CFR PART 1015
(OMB CONTROL NUMBER: 3170-0007)
OMB TERMS OF CLEARANCE:
Not applicable. The Office of Management and Budget (OMB) did not provide Terms of
Clearance when they last approved this information collection on September 22. 2015.
ABSTRACT:
The required disclosures under Regulation O 12 CFR 1015 assist prospective purchasers
of Mortgage assistance relief services (MARS) in making well-informed decisions and avoiding
deceptive and unfair acts and practices. The information that must be kept under Regulation O's
recordkeeping requirements is used by the Bureau of Consumer Financial Protection (Bureau or
BCFP) and the Federal Trade Commission (FTC) for enforcement purposes and to ensure
compliance by MARS providers with Regulation O. The information is requested only on a caseby-case basis.
A. JUSTIFICATION
1. Circumstances Necessitating the Data Collection
The Mortgage Assistance Relief Service Rule was created under section 626 of the 2009
Omnibus Appropriations Act, Pub. L. No. 111-8, published as the MARS rule under 16 CFR
322, and clarified by section 511 of the Credit Card Accountability and Responsibility and
Disclosure Act of 2009, Pub. L. No. 111-24 (Credit CARD Act). The Dodd-Frank act (Pub. L.
111-203, Sec. 1097) transfers rulemaking authority and shared enforcement authority to the
BCFP under 12 CFR 1015. This rule covers Mortgage Assistance Relief Service providers,
which are for-profit services which assist consumers who are struggling to meet mortgage
obligations and/or avoid foreclosure.
Disclosure requirements
In commercial communications for a general audience, MARS providers are required to
make the following disclosure:
(1) “(Name of company) is not associated with the government and our service is not
approved by the government or your lender”; and

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(2) in some instances, that “[e]ven if you accept this offer and use our service, your
lender may not agree to change your loan.”
In addition, MARS providers must disclose to consumers, in any subsequent commercial
communication directed to a specific consumer, the following information:
(1) that “You may stop doing business with us at any time. You may accept or reject the
offer of mortgage assistance we obtain from your lender [or servicer]. If you reject the
offer, you do not have to pay us. If you accept the offer, you will have to pay us (insert
amount or method for calculating the amount) for our services”;
(2) that “(Name of company) is not associated with the government and our service is not
approved by the government or your lender”; and
(3) in some instances, that “[e]ven if you accept this offer and use our service, your
lender may not agree to change your loan.”
Furthermore, MARS providers are required to disclose to consumers in all
communications in which the provider represents that the consumer should temporarily or
permanently discontinue payments, in whole or in part, the following information:
“If you stop paying your mortgage, you could lose your home and damage your credit
rating.”
Finally, after a provider has obtained an offer of mortgage assistance relief from the
lender or servicer and presented the consumer with a written agreement incorporating the offer,
the MARS provider must disclose the following:
(1) “This is an offer of mortgage assistance relief service from your lender [or servicer].
You may accept or reject the offer. If you accept the offer, you will have to pay us [same
amount as disclosed pursuant to § 1015.4(b)(1)] for our services”; and
(2) a description of all “material differences” between the terms, conditions, and
limitations of the consumer’s current mortgage and those associated with the offer for
mortgage relief, provided in a written notice from the consumer’s lender or servicer.
Regulation O also requires making the disclosures clear and prominent, specific to the
media used. Disclosures are necessary for the following reasons:
•

Non-affiliation with the government or lenders: The BCFP, FTC and state law
enforcement officials have brought numerous law enforcement actions against MARS
providers who have misrepresented their affiliation with government agencies or
programs, lenders, or servicers, in connection with offering MARS. These providers
have used a variety of techniques to create such misimpressions, including advertising
under trade names that resemble the names of legitimate government programs. Given
that the government, for-profit entities, and nonprofit entities assist financially distressed
consumers with their mortgages, and allowing for the frequency of deceptive affiliation
claims, the requirement that MARS providers disclose their nonaffiliation with the
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government or with consumers’ lenders or servicers is reasonably related to the goal of
preventing deception.
•

Risk of Nonpayment of Mortgage: There have been numerous cases where MARS
providers frequently encourage consumers, often through deception, to stop paying their
mortgages and instead pay providers. Consumers who rely on these deceptive statements
frequently suffer grave financial harm. Requiring MARS providers who encourage
consumers not to pay their mortgages to disclose the risks of following this advice is
necessary to prevent deception.

•

Total amount a consumer must pay: The total cost of mortgage assistance relief services
is perhaps most material to consumers in making well-informed decisions on whether to
purchase those services. Requiring the clear and prominent disclosure of total cost
information in every communication directed at a specific consumer before the consumer
enters into an agreement would decrease the likelihood that MARS providers will deceive
prospective customers with incomplete, inaccurate, or confusing cost information.
Requiring MARS providers to disclose total cost information clearly and prominently is
reasonably related to the prevention of deception.

In addition, Regulation O prohibits providers from collecting fees until the consumer has
accepted the results obtained by the provider. To effectuate fully the advance fee ban, it also is
necessary for the provider to inform consumers that they may withdraw from the service and
may accept or reject the result delivered by the provider. This disclosure is reasonably related to
preventing unfair and deceptive acts and practices by MARS providers.
•

No guarantee: Historically, MARS providers often misrepresent their likelihood of
success in obtaining a significant loan modification for consumers. These deceptive
success claims lead consumers to overestimate MARS providers’ abilities to obtain
substantial loan modifications or other mortgage relief from MARS providers. Requiring
MARS providers to inform consumers that lenders might not agree to change consumers’
loans, even if those consumers purchase the services that the MARS provider offers, is
reasonably related to the goal of preventing deception.

•

Written Notice from Lender or Servicer: Based on the BCFP’s and FTC’s law
enforcement experience, the BCFP believes that providing the consumer with a notice
from the consumer’s lender or servicer describing all material differences between the
consumer’s current mortgage loan and the offered mortgage relief is essential to
consumers’ ability to evaluate whether they should accept the offer. Requiring that the
lender or servicer prepare the written disclosure also better ensures that the information
provided is consistent with the terms of the offer, and mitigates against the risk that
MARS providers would mislead consumers about the offer. This disclosure is reasonably
related to the goal of protecting consumers from the deception.
Recordkeeping requirements

In some instances, these requirements pertain to records that are customarily kept in the
ordinary course of business, such as copies of contracts and consumer files containing the name
and address of the borrower and materially different versions of sales scripts and related
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promotional materials. Thus, the retention of these documents does not constitute a “collection
of information,” as defined by OMB’s regulations that implement the PRA. 1
In other instances, the recordkeeping requirements pertain to requiring providers to create
and retain documents demonstrating their compliance with specific rule requirements. These
include the requirement that providers document the following activities:
(1) performing MARS and retaining documentation provided to the consumer;
(2) monitoring sales presentations by recording and testing oral representations if
engaged in telemarketing of services;
(3) establishing a procedure for receiving and responding to consumer complaints;
(4) ascertaining, in some instances, the number and nature of consumer complaints; and
(5) taking corrective action if sales persons fail to comply with Regulation O, including
training and disciplining sales persons.
The information obtained from the law enforcement record establishes the need for these
recordkeeping requirements. There appears to be widespread deception and unfair practices in
the MARS industry, targeting financially vulnerable consumers. Accordingly, strong
recordkeeping requirements are needed to ensure effective and efficient enforcement of
Regulation O and to identify injured consumers.
2. Use of the Information
The required disclosures under Regulation O assist prospective purchasers of MARS in
making well-informed decisions and avoiding deceptive and unfair acts and practices.
The information that must be kept under Regulation O’s recordkeeping requirements is
used by the BCFP and other relevant agencies for enforcement purposes and to ensure
compliance by MARS providers with Regulation O. The information is requested only on a
case-by-case basis.
3. Use of Information Technology
The disclosures required by Regulation O are format-neutral and do not limit MARS
providers’ use of available information technology that might reduce compliance burdens.
Likewise, Regulation O’s recordkeeping provisions do not limit the use of available technology
to maintain required records. Rather, Regulation O specifically allows providers to keep the
records in any form and in the same manner, format, or place as they keep records in the ordinary
course of business. Thus, Regulation O is consistent with the aims of the Government
Paperwork Elimination Act, 44 U.S.C. § 3504.

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5 CFR 1320.3(b)(2).

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4. Efforts to Identify Duplication
The disclosure and recordkeeping provisions in Regulation O do not duplicate any other
federal information collection requirements. The BCFP is unaware of any duplicative state
requirements.
5. Efforts to Minimize Burdens on Small Entities
Regulation O attempts to minimize compliance burdens for all entities. Inasmuch as the
population of affected providers likely consists largely of small entities, exemptions based on
size would undermine the protective aims of Regulation O.
6. Consequences of Less Frequent Collection and Obstacles to Burden Reduction
Providing the disclosures required by Regulation O less frequently would undermine the
protective aims of the rule. As a threshold matter, it is important that consumers know before
they begin dealing with MARS providers: (1) that MARS providers are not associated with the
government or with consumers’ lenders; and (2) that regardless of the service or result the
MARS providers represent the consumer will receive by using their services, the lender may not
agree to change the consumer’s loan. Thus, it is necessary that these disclosures be made in all
communications with consumers prior to consumers entering into an agreement to purchase
MARS. In addition, these disclosures, along with the disclosure of total cost and the right to
cancel the service at any time, are needed in each subsequent commercial communication with
specific consumers to increase the chances that consumers will read and understand the required
information. Furthermore, the disclosure to the consumer regarding the risk of failing to pay his
or her mortgage is necessary in all communications in which the triggering statement is made
given the harm that could result from following such advice. These requirements will prevent
MARS providers from disclaiming, qualifying, or contradicting disclosures in subsequent
statements to consumers during telemarketing calls or e-mail communications. Enforcement
experience indicates that this practice of contradictory statements by MARS providers is
common.
Regulation O also is tailored to minimize the frequency of recordkeeping as much as
possible. The rule requires that MARS providers maintain records relating to actual transactions
with customers; they are not required to keep records when consumers do not sign contracts or
do not agree to an offer. In addition, providers would only be required to retain materially
different versions of advertising and related materials. Further, the BCFP’s and FTC’s record
supports the conclusion that the two-year retention requirement is the minimum amount of time
necessary for consumers to report violations of Regulation O and for the BCFP to complete
investigations and to identify victims.
7. Circumstances Requiring Special Information Collection
The collections of information in Regulation O are consistent with the applicable
guidelines contained in 5 CFR 1320.5(d)(2).

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8. Consultation Outside the Agency
In accordance with 5 CFR §1320.8(d)(1), the Bureau published a notice Federal Register
allowing the public 60 days to comment on this proposed the extension (renewal) of this
currently approved collection of information. No responsive comments were received in
response to this notice. Further and in accordance with 5 CFR §1320.5(a)(1)(iv), the Bureau also
published a notice in the Federal Register allowing the public 30 days to comment on the
submission of this information collection request to the Office of Management and Budget.
9. Payments or Gifts to Respondents
No payments or gifts are provided to respondents.
10. Assurances of Confidentiality
To the extent that information covered by a recordkeeping requirement is collected by the
BCFP for law enforcement purposes, the confidentiality provisions of BCFP’s rules on
Disclosure of Records and Information, 12 CFR Part 1070, would apply.
11. Justification for Sensitive Questions
The BCFP collects no information under Regulation O, which requires institutions to
provide general and transaction-specific disclosures to consumers and keep records of those
disclosures, as well as records of contracts and communication with consumers. No questions of
a sensitive nature are asked of respondents.
12. Estimated Burden of Information Collection
Labor Hours: 360
Ongoing Labor Burden
Regulation

Description

No. of
Respondents

Annual
Burden Hours
per
Respondent

1015.4(a)

General Commercial
Communications Disclosure

120

1.2

1015.4(b)

Consumer-Specific
Communications Disclosure(s)

120

1.2

1015.4(c)

Contingent Consumer-Specific
Disclosures

120

1.2

1015.5(b) & (c)

Additional Contingent ConsumerSpecific Disclosure(s)

120

1.2

6

Hourly
Rate

32.63
32.63
32.63
32.63

Total Burden
Hours

144
144
144
144

Associated
Labor Costs

$4,699
$4,699
$4,699
$4,699

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120

1015.5(d)

Additional Contingent ConsumerSpecific Disclosure(s) for trial
loan modifications

1015.9

Recordkeeping

120

1.2

144
32.63

$4,699
0

0

Total Labor Burden

720

$23,494

CFPB Share

360

$11,747

BCFP’s estimates of burdens for the ongoing requirements under Regulation O are based
on an analysis conducted after the regulation was restated by the BCFP. While we include the
recordkeeping provision in the above table, we assume zero additional burden for requirements
beyond the normal course of business. For PRA purposes regarding Regulation O, the BCFP
and FTC share enforcement authority and thus split the PRA burden associated with affected
entities. 2 This burden amounts to 720 hours total, of which 360 hours are attributed to the BCFP.
The BCFP estimates that there are 120 MARS providers in the United States. 3 The
BCFP also estimates that compliance with all required MARS disclosures requires 6 hours
of labor annually. Distributing these costs equally across the required disclosures and
multiplying by 120 entities yields a total burden of 720 hours total, of which 360 hours are
attributed to the BCFP.
Associated Labor costs: $11,747
To calculate associated labor costs the BCFP assumes a wage of $32.63/hr. 4
Multiplying this wage by the total burden yields an associated labor cost of $23,494, of
which the BCFP assumes half, or $11,747.

Under Dodd-Frank Act, the BCFP shares with the FTC half of the burden imposed non-depository institutions.
Estimates are based on available data, which is limited. Nevertheless, California has a public listing of registered
MARS providers (see the California Attorney General’s “Stop Mortgage Fraud” list of registered loan modification
providers), and assuming providers are spread out across the United States at similar proportions to the general
population, we estimate the number of registered MARS providers in California to be approximately 120 for-profit
non-attorney entities performing loan modification.
4
See BLS Occupational Employment and Wages estimate of the median hourly wage for a Compliance Officer
(occupation code 13-1041) of $32.63. Available at https://www.bls.gov/oes/current/oes131041.htm.
2
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13. Estimated Total Annual Cost Burden to Respondents or Recordkeepers
Additional Material Burden: $33,000
Exhibit 2: Cost Burden Summary

Ongoing Material Burden

Burden Type

No. of
Respondents

Additional Compliance Support

Per Unit
Cost

120

$550

Quantity per
respondent
1

Total Material Burden
CFPB Share

Total
Material
cost
$66,000
$66,000
$33,000

The BCFP does not believe there is any additional burden imposed by the recordkeeping
requirement in 5 CFR 1015.9. 5 The BCFP estimates that each MARS provider bears an
additional $550 in material fees 6 for acquiring relevant legal and technical compliance
information. Across all 120 respondents the total additional material burden is $66,000, of
which the BCFP allocates to itself half, or $33,000.
14. Estimated Cost to the Federal Government
As the BCFP does not collect any information, there are no additional costs to the Federal
Government.
15. Program Changes or Adjustments
Summary of Burden Changes
Total
Respondents
Total Requested
Current OMB
Inventory
Difference (+/-)
Program Change
Discretionary
New Statute
Violation
Adjustment

Annual
Responses

Burden Hours

Cost Burden

120
107

120
107

360
322

$33,000
$ 29,425

+13
0
+13
0
0
0

+13
0
+13
0
0
0

+38
0
+38
0
0
0

+$3,575
$0
+$3,575
$0
$0
0

The Bureau’s increase in responses, hours, and burden is due to the increase in
BCFP assumes that MARS providers keep records of all customer communications in the ordinary course of
business. This assumption is based on conversations with industry and supervision personnel.
6
$550 is the estimated cost for the purchase of information regarding regulatory updates from law offices or trade
associations.
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number of respondents.
16. Plans for Tabulation, Statistical Analysis, and Publication
There are no plans to provide any publications based on the information collection of this
regulation.
17. Display of Expiration Date
The OMB control number and expiration date associated with this PRA submission will
be displayed on the Federal government’s electronic PRA docket at www.reginfo.gov. There are
no required forms or other documents upon which display of the control number and expiration
date would be appropriate.
18. Exceptions to the Certification Requirement
The Bureau certifies that this collection of information is consistent with the requirements
of 5 CFR 1320.9, and the related provisions of 5 CFR 1320.8(b)(3) and is not seeking an
exemption to these certification requirements.

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