Some reprieve from MARS Rule for real estate agents

15 Jul

Some “carve out” from the FTC’s MARS rule is now available for real estate agents!

In a press release issued today (July 15th) from the Federal Trade Commission (FTC), it appears that the FTC has recognized that its Mortgage Assistance Relief Services (MARS) Rule, which has been posted about on the TN Legal Update blog several times previously, should not be enforced against agents engaged in listing short sale property, so long as the requirements set forth in the modification to the MARS Rule are met.  Here’s an excerpt from the FTC’s press release, issued today:

At this time, the Commission has announced that it will not enforce most of the provisions of the MARS Rule against real estate professionals who are engaged in obtaining short sales for consumers. The stay applies only to real estate professionals who: 1) are licensed and in good standing under state licensing requirements; 2) comply with state laws governing the practices of real estate professionals; and 3) assist or attempt to assist consumers in obtaining short sales in the course of securing the sales of their homes. The stay exempts real estate professionals who meet these requirements from the obligation to make disclosures and from the ban on collecting advance fees. These professionals, however, remain subject to the Rule’s ban on misrepresentations.

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 Rule and Section 5 of the FTC Act, which prohibits unfair and deceptive practices, against all other providers of mortgage assistance relief services.

http://www.ftc.gov/opa/2011/07/mars.shtm

Please note, this is not a repeal of the MARS Rule, or an exemption for real estate agents in all transactions.  Instead, its a limitation of the scope/applicability of the MARS Rule to real estate transactions where listing agents are effectively involved in mortgage relief as an incidental or secondary service, where the primary focus of the transaction is to get the seller’s home sold.  This is great news to real estate agents and brokers nationwide who have been wrestling with the various MARS disclosure requirements, the ban on up-front fees, and some of the hurdles the MARS rule presented to an already burdened and heavily regulated real estate industry.

Since the MARS Rule itself remains in place, and obligations and responsibilities remain, it is wise to discuss the application of the MARS rule to your own business practices with your own legal counsel.  Review the full FTC Press Release here: http://www.ftc.gov/opa/2011/07/mars.shtm.  Review the FTC’s statement here: http://www.ftc.gov/os/2011/07/110714marsrealestatepolicy.pdf

Keep the Thomsen Nybeck Legal Update blog bookmarked and check back for more/future updates regarding the FTC MARS rule.

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This blog entry is written by Brad Boyd, a Shareholder at Thomsen Nybeck. Brad is the chair of the firm’s Transactional Group, and his practice focuses primarily in Real Estate, Real Estate Brokerage, Business and Corporate law, and Wind Energy Law.  Brad provides legal advice, guidance, and representation related to risk management in a wide variety of real estate and business law matters.  He is counsel to the Minnesota Association of Realtors, many individual Realtors and brokerages, business clients and individuals.

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