MCDANIEL NEWS RELEASE
LITTLE ROCK–Today, Attorney General Dustin McDaniel met with three members of the President’s cabinet, the chairman of the Federal Trade Commission and 11 other Attorneys General to discuss emerging trends and new actions in the housing market designed to protect consumers.
Treasury Secretary Tim Geithner, Attorney General Eric Holder, HUD Secretary Shaun Donovan, FTC Chairman Jon Leibowitz, and Financial Crimes Enforcement Network Director Jim Freis met with McDaniel and state Attorneys General from Arizona, Connecticut, Illinois, Iowa, Maryland, Missouri, Nevada, North Carolina, Ohio, Rhode Island, and Washington
“It's unprecedented to have three cabinet members and the chairman of the FTC meet with a dozen AG's, and it shows a new level of cooperation to better serve the people of our states,” McDaniel said.
The focus of the meeting was loan modification and foreclosure rescue scams. The Arkansas Attorney General’s Office has been addressing these matters for some time and has issued a number of consumer alerts designed to raise awareness about these scams. However, "help from the federal government is necessary in order to fight the sharks who flood our airwaves with deceptive ads offering false hope to people in need," McDaniel said.
Arkansas has filed suit against one company, 21st Century Legal Services, Inc., for the loan modification scams it has been operating in the state. That company was offering to negotiate the terms of a consumer’s loan with the mortgage company for a large up front fee. However, all of the evidence suggests that 21st Century has done nothing other than take the money from consumers.
Among the items discussed with Secretary Geithner is the need for a federal law prohibiting up front fees for businesses offering loan modification services. “We have had such law in Arkansas since 1993, but less than half of the states have one," McDaniel said. The FTC chairman indicated today that the federal government will likely follow Arkansas' lead before the end of the year and create a rule banning up front fees for loan or mortgage modification contracts.
McDaniel informed the Treasury Secretary of his efforts to rid Arkansas of payday lenders but also advised of his concern with bank overdraft fees. "These fees are often excessive and harmful to consumers. The banks claim federal authority for these fees, so the Secretary should work to rein them in," McDaniel said.
McDaniel also expressed concern to Secretary Geithner about President Obama's proposal for a new banking regulatory agency. McDaniel cautioned the Secretary that the proposed agency "threatens to declaw our State Bank Commissioner and to punish responsible community banks in Arkansas for the sins of major Wall Street players.”.