Topic: Mortgage Assistance

Relief Services (MARS)

Answers Your Legal Questions

Rules on MARS 

Federal Rules that cover Short Sale Negotiations by Real Estate Licensees

The Federal Trade Commission (FTC) implemented federal rules that went into effect on December 29, 2010 with certain provisions becoming effective on January 31, 2011 covering the business of short sale negotiations between lenders and owners of underwater properties. The acronym used is MARS which stands for Mortgage Assistance Relief Services.

Do these rules apply to real estate licensees?  Yes, in certain circumstances they do apply. As a result, it is very important that you read the National Association of REALTORS’® (NAR’s) article on this subject "New FTC Rule Requires Short Sale Disclosures"

As you can see from the article, there is a prohibition against taking up-front fees when and if you are negotiating a short sale transaction. You may have to make general disclosures if you are holding yourself out as a MARS/short sale expert. You need to make specific disclosures if you are negotiating a short sale on a client’s behalf.  In addition, if you represent buyers who seek to negotiate with the seller’s lender, you will need to comply with these MARS rules. Keep this in mind if you represent any kind of “intermediary” who is using some method of purchase (like an option contract for example) in order to “assist” the seller by accomplishing a short sale.

It is also very important that you are aware that you could be in violation of these rules for referring or assisting in procuring a MARS provider for a seller without having some idea about the MARS provider’s method of negotiating for the short sale relief. The rules state:

It is a violation of this rule for a person to provide substantial assistance or support to any mortgage assistance relief service provider when that person knows or consciously avoids knowing that the provider is engaged in any act or practice that violates this rule. (16 CFR Part 322.6)

In other words you could violate these rules if you refer your distressed seller to a MARS provider who is violating the rule or if you don’t educate yourself to some extent regarding their practices. You should also inquire as to the disclosures they are making to the seller. 

Click here for sample disclosure language: 

  • FORM #1 - General Commercial Communications Disclosures
  • FORM #2 – Sample Consumer Specific Commercial Communication Disclosure
  • FORM #3 - Disclosure When Providing an Offer of Mortgage Relief


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