Mortgage Assistance Relief Services (MARS) Rule Update

by Michelle Lind on January 20, 2011

The Federal Trade Commission (FTC) issued a rule on Mortgage Assistance Relief Services (MARS), which has generated numerous questions.  A plain reading of the rule seems to sweep real estate professionals involved in short sale transactions under the MARS requirements, which include specific disclosures and a prohibition of up-front fees.  However, a footnote in the FTC’s rule commentary states:

126 As a general matter, the Final Rule is not intended to apply to the marketing of services to assist consumers in selling their properties to third parties. The Final Rule, however, does specifically cover the marketing of services involving the sale of properties to third parties if those services are designed or intended to assist consumers in averting foreclosure, e.g., through a short sale or deed-in-lieu of foreclosure. One commenter urged the Commission to exempt licensed real estate professionals from the Final Rule. NAR at 1–2. The commenter argued the Rule would restrict real estate agents in helping consumers with the process of selling their homes through short sales. Id. The Commission concludes that an exemption for real estate agents is not necessary. Real estate agents customarily assist consumers in selling or buying homes and perform functions such as listing homes for sale, showing homes, and finding desirable homes for consumers. The Commission is aware that real estate agents may perform these functions when properties are bought or sold through a short sale transaction, but does not consider these services to be MARS.

AAR sent a request to NAR legal counsel, which was forwarded to the NAR DC regulatory staff, that the issue be further clarified.  Here is a link to the MARS information on NAR’s website.

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