FTC Will not enforce provisions of MARS Rule against Real Estate Professionals

By
Real Estate Agent with Realty Associates 3100213

The FTC Will Not Enforce Provisions of MARS Rule Against Real Estate Professionals Helping Consumers Obtain Short Sales

The Federal Trade Commission announced last week that it will no longer enforce most provisions of its Mortgage Assistance Relief Services (MARS) Rule against real estate brokers and their agents who assist financially distressed consumers in obtaining short sales from their lenders or servicers.

The MARS disclosures have been found to be confusing and misleading to distressed homeowners working on short sales. It seems the rule may have inadvertently discouraged real estate professionals from helping consumers with short sales. Short sales are complicated enough without additional unnecessary paperwork that could deter Realtors from assisting consumers with these types of transactions.

The MARS rule, which was proposed in 2009 and finalized and implemented in December 2010, targeted for-profit companies that charge high fees to consumers seeking mortgage assistance and required participants to disclose information about their services and barred companies from charging advance fees. The purpose of MARS was to stop companies and individuals from taking advantage of distressed homeowners by leading them to believe they were affiliated with the government or their mortgage company.

The FTC said it will no longer enforce most of the provisions of the MARS rule against real estate professionals who are completing short sale transactions. Regarding licensed real estate professionals who are also in good standing under state requirements, the FTC says they will now be exempt from the “obligation to make disclosures and from the ban on collecting advance fees.”

Although, the FTC rule allows agents to collect advance fees, Florida law does not! Both the Florida Attorney General and the Florida Office of Financial Regulation PROHIBIT a Realtor from charging any fee whatsoever for negotiating a short sale. The foregoing was confirmed in a telephone conversation with a Florida Association of Realtors (FAR) Attorney today, July 25, 2011.

Real estate and other professionals still remain subject to the Rule’s ban on misrepresentations, which include:

  • Promising the consumer that the Realtor could obtain a certain price for the short sale.
  • Misrepresenting the types of services that the Realtor will provide, such as claiming expertise in short sales when this is not true and otherwise misrepresenting the results that the Realtor may obtain for the consumer, such as promising a consumer that they will not have any deficiencies from the short sale when there is no basis for the statement.

The Commission stated that the stay does not apply to real estate professionals who provide other types of mortgage assistance relief, such as loan modifications. In addition, the FTC will continue to enforce the rules which prohibit unfair and deceptive practices, against all other providers of mortgage assistance relief services.

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Rainmaker
690,702
Elite Home Sales Team
Keller Williams Realty - San Clemente, CA
A Tenacious and Skilled Real Estate Team

If the Real Estate agent cannot help the seller who can on a short sale?

Oct 15, 2011 02:23 AM #1
Rainmaker
930,424
Ronald DiLalla
Century 21 Discovery DRE 01813824 - Anaheim, CA
No. Orange Cty Real Estate

Isn't that what we do?  Assist and help clients????

Oct 15, 2011 02:28 AM #2
Rainmaker
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Rob Arnold
Sand Dollar Realty Group, Inc. - Altamonte Springs, FL
Metro Orlando Full Service - Investor Friendly & F

I wish the government would just stay out of all this.  Their over-regulation is helping keep the economy depressed. 

Oct 18, 2011 12:47 PM #3
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Rainmaker
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Kamal Salim

A Superior Level of Service !
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