MARS (Regulation O) Supporting Statement (2020)

Federal Trade Commission Supporting Statement for
Mortgage Assistance Relief Services (Regulation O)
12 C.F.R. Part 1015
(OMB Control No. 3084-0157)
The Federal Trade Commission (“FTC” or “Commission”) requests clearance from the
Office of Management and Budget (“OMB”) for its shared enforcement authority with the
Consumer Financial Protection Bureau (“CFPB”) for the disclosure and recordkeeping
requirements contained in the CFPB’s Regulation O.
Title X of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“DoddFrank Act”), Public Law 111–203, 124 Stat. 1376 (2010), transferred the Commission’s
rulemaking authority under the mortgage provisions in section 626 of the 2009 Omnibus
Appropriations Act, as amended,1 to the CFPB.2 On December 16, 2011, the CFPB republished
the Mortgage Assistance Relief Services (“MARS”) Rule as Regulation O (12
C.F.R. 1015).3
As a result, the Commission subsequently rescinded its MARS Rule (16 C.F.R. Part
322).4 Nonetheless, under the Dodd-Frank Act, the FTC retains its authority to bring law
enforcement actions to enforce Regulation O.5
1. Necessity for Collecting the Information
The Rule requires disclosures to assist prospective purchasers of mortgage assistance
relief services in making well-informed decisions and avoiding deceptive and unfair acts and
practices. In commercial communications for a general audience, MARS providers are
required to make the following disclosure in a “clear and prominent” manner:
(1) “(Name of company) is not associated with the government and our service is not
approved by the government or your lender”; and
(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
1

Public Law 111–8, section 626, 123 Stat. 524 (Mar. 11, 2009).

2

Dodd-Frank Act, § 1061, 12 U.S.C. § 5581 (2010).

3

76 Fed. Reg. 78130.

4

77 Fed. Reg. 22200 (April 13, 2012).

5

Dodd-Frank Act, § 1061(b)(5), 12 U.S.C. § 5581(b)(5).

1

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.
These disclosures are necessary for the following reasons:

Non-affiliation with the Government or Lenders: Federal 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, forprofit entities, and nonprofit entities assist financially distressed consumers with their
mortgages, and given the frequency of deceptive affiliation claims, the requirement that
MARS providers disclose their nonaffiliation with the government or with consumers’
lenders or servicers is reasonably related to the goal of preventing deception.

Risk of Nonpayment of Mortgage: The FTC’s law enforcement experience
and the rulemaking record for the Rule demonstrate that MARS providers frequently
encourage consumers, often through deception, to stop paying their mortgages and instead
2

pay providers. Consumers who rely on these deceptive statements can 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 MARS is material to
consumers in making well-informed decisions about 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.

Advance Fee Ban: Regulation O prohibits providers from collecting fees until
the consumer has accepted the results obtained by the provider. To effectuate 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 of Results: The FTC’s law enforcement experience and the
rulemaking record demonstrates that 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 relief. 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 FTC’s law enforcement
experience and the rulemaking record, 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 and therefore pay the MARS provider.
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 deception.
Regulation O also requires covered entities to retain certain records 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 promotional materials. These records are
customarily kept in the ordinary course of business; thus, the retention of these documents does
not constitute a “collection of information,” as defined by OMB’s regulations that implement the
PRA.6
6

5 C.F.R. § 1320.3(b)(2).

3

2. Use of the Information
The required disclosures under Regulation O assist prospective purchasers of MARS
to make well-informed decisions and to avoid deceptive and unfair acts and practices.
The information that must be kept under Regulation O’s recordkeeping requirements is
used by the Commission, or by persons authorized by the Commission, and other law
enforcement 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. Consideration to Use Improved Information Technology to Reduce Burden
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 note.
4. Efforts to Identify Duplication
The disclosure and recordkeeping provisions in Regulation O do not duplicate any
other federal information collection requirements. The Commission is unaware of any
duplicative state requirements.
5. Efforts to Minimize Burden on Small Organizations
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 Conducting the Collection Less Frequently
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 that: (1) MARS providers are not
associated with the government or with consumers’ lenders; and (2) 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
4

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. The Commission’s 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 FTC’s
experience 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 FTC
to complete investigations and to identify victims.
7. Circumstances Requiring Collection Inconsistent With Guidelines
The collection of information in the Final Rule is consistent with all applicable
guidelines contained in 5 C.F.R. 1320.5(d)(2).
8. Consultation Outside the Agency
The Commission consulted with the CFPB, and recently sought public
comment on the PRA aspects of the Rule, as required by 5 C.F.R. 1320.8(d). See 84 FR
58388 (October 31, 2019). One comment was received from an interested person that
indicated “wholehearted support” for the proposed three-year extension. The
Commission is providing a second opportunity for public comment while seeking
OMB approval to extend the existing PRA clearance for the notice provisions of the
Rules.
9. Payments and Gifts to Respondents
Not applicable.
10-11. Assurances of Confidentiality/Matters of a Sensitive Nature
Not applicable. To the extent that information covered by a recordkeeping
requirement is collected by the FTC for law enforcement purposes, the confidentiality
provisions of Section 21 of the FTC Act, 15 U.S.C. § 57b-2, would apply. Furthermore,
most of the information to be disclosed is of a routine business nature.

5

12. Estimated Annual Hours and Labor Cost Burden
Because the FTC and CFPB share enforcement authority for this rule, the FTC is
seeking clearance for one-half of the following estimated PRA burden that the FTC attributes
to the disclosure and recordkeeping requirements under Regulation O.
The following estimates are based on available data,7 the FTC and CFPB’s law
enforcement experience, and the CFPB’s recent analysis conducted as part of the PRA
clearance renewal for the information collections associated with the Regulation O.8 Based
on these factors, the FTC and CFPB estimate that there are approximately 120 for-profit,
non-attorney entities offering MARS services and subject to Regulation O’s requirements.9
Estimated annual hours burden: 360 (FTC share).
The FTC and CFPB estimate that compliance with Regulation O’s disclosure
requirements for MARS providers requires 6 hours of labor annually.10 Multiplying this
figure by 120 entities yields a total burden for covered providers of 720 hours annually.11
For PRA purposes, the FTC and CFPB share enforcement authority and split the information
collection burden associated with the Rule equally. As a result, the FTC assumes 360 hours
of this total annual hours burden.
Estimated associated labor cost: $11,747 (FTC share).
In calculating the associated labor costs, Commission staff estimates that a
compliance officer or equivalent will prepare the required disclosures at an hourly rate of
$32.63/hr.12 Thus, the estimated labor cost is $23,494 (120 providers × 6 hours × $33.26)
of which the FTC assumes half, or $11,747.

7

See California Attorney General’s “Stop Mortgage Fraud” list of registered loan modification providers.

Consumer Financial Protection Bureau, Agency Information Collection Activities: Comment Request, 83
FR 45,111 (Nov. 5, 2018).
8

See CFPB Supporting Statement, Mortgage Assistance Relief Services (Regulation O) 12 CFR 1015,
OMB Control No: 3170-0007 (Nov. 28, 2018), available at
https://www.reginfo.gov/public/do/PRAViewDocument?ref_nbr=201808-3170-003; clearance expires on
July 31, 2022.
9

10

Id.

11

Id.

This estimate is based on the median hourly wage for a Compliance Officer (occupation code 13-1041)
of $32.63 provided by the Bureau of Labor Statistics. 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.
12

6

Information
Collection

Number of
Respondents
120

Annual
Burden Hours
per
Respondent
6

FTC 50% Share

Total
Burden
Hours

Associated
Hourly Labor
Cost

Total Respondent
Costs

720
360

$32.63

$23,494
$11,747

13. Estimate of Capital or Other Non-Labor Costs
Estimated non-labor cost: $29,425 (for the FTC).
The FTC and CFPB estimate that each of the estimated 120 MARS providers bears an
additional $550 in material fees for acquiring relevant legal and technical compliance
information, for a total additional burden of $66,000, of which the FTC assumes half, or
$33,000. Based on law enforcement experience, the FTC assumes that any disclosures will
likely be made electronically and thus will not generate additional non-labor costs such as
printing and distribution.
14. Estimate of Cost to Federal Government
Annualized for a prospective 3-year PRA clearance, estimated fiscal year cost to
enforce the Rule will be approximately $200,000. This estimate is based on the assumption
that one full attorney work year will be expended in that effort. Clerical and other support
services are also included in this estimate.
15. Program Changes/Adjustments
There are no program changes. Staff has revised its estimate of burden hours based
on estimates of the number of MARS providers subject to the Rule and updated the estimate
of hourly wage rates for compliance officers who will perform the work associated with rule
compliance based on updated rates published by the Bureau of Labor Statistics.
16. Plans for Tabulation and Publication
The FTC has no plans to issue any publications based on the information collections
under this regulation.
17. Failure to Display the OMB Expiration Date
The OMB control number and expiration date associated with this PRA collection 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.

7

18. Exceptions to Certification
The FTC certifies that this collection of information is consistent with the requirements of 5
CFR 1320.9, and the related provisions of 1320.8(b)(3) and is not seeking an exemption to these
certification requirements.

8